IRDAI issues guidelines relating to Own Damage Insurance cover for Cars and Two-wheelers

Jun 24, 2019 | by Avantis RegTech Legal Research Team

The Insurance Regulatory and Development Authority of India (IRDAI) on June 21, 2019, hereby amends Para 5 of the Circular Ref: IRDA/NL/CIR/MOT/137/08/2018 dated August 28, 2018. The Para 5 of the Circular sets out the guidelines regarding Motor Own Damage Insurance cover in the context of package products as well as stand-alone motor third party insurance product (wherein a bundled cover was permitted—one year for Own Damage bundled with long term Third Party cover for new Car or new Two-wheeler, as applicable) with effect from September 01, 2018.

Now, the following guidelines relating to Own Damage Insurance cover for Cars and Two-wheelers shall replace the guidelines in Para 5 (i)(2) relating to annual cover for Motor Own Damage:

• From September 01, 2019, the insurers shall make available stand-alone annual own damage covers (including stand-alone OD cover for fire and/or theft [GR 45A and 45B] if opted for by the policyholder) for cars and two-wheelers, both new and old and the issuance of bundled policies for cars and two-wheelers will not be compulsory. 

• Policyholders have the option to renew the Own Damage component of a bundled cover falling due on or after September 01, 2019, with the same insurer or different insurer, on an annual basis.

• For issuance of stand-alone Own Damage annual cover as well as for renewal of the Own Damage component of a bundled cover, insurers shall ensure that OD cover is offered only if a Motor TP cover is already in existence or is taken simultaneously. The Stand-alone Own Damage policy shall clearly mention that the coverage is only for Own Damage and no other liability in connection with the vehicle.

• The pricing of a stand-alone OD policy shall continue to be that being offered for the OD component of a package policy.

Insurers shall file a Letter of Intent (Annexure A, Page 3), through BAP upon receipt of which a UIN would be allotted for the stand-alone Own Damage product or add-on.

Further, with reference to Para 2(iv)(c) of Circular August 28, 2018, it is hereby clarified that in the event a vehicle is sold, GR 17 applies. However, the question arises that should the insured take motor third party insurance cover from another insurer simultaneously, he or she can cancel the one automatically transferred, provided proof of new insurance is shown. This shall apply to annual package and stand-alone TP policies also.

[Circular Ref no.  IRDAI/NL/CIR/MOTOD/095/06/2019]

Click here to download the Circular.



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