Buying a new car or a two-wheeler will get slightly cheaper as the mandatory long-term insurance package plans will be withdrawn from August 1.

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The Insurance Regulatory Development Authority of India (IRDAI) has decided to take away the mandatory long-term package cover offering both ‘Motor Third Party’ and ‘Own Damage Insurances’ for 3 years on new cars and for 5 years on new two-wheelers.

For buyers, this move will bring down the cost of first-year insurance for new four-wheelers and two-wheelers.

"It will also bring down the upfront cost of vehicle ownership for a buyer," says Sajja Praveen Chowdary, Head-Motor Insurance, Policybazaar.

Not buying a long-term policy will further provide the flexibility to switch the 'Motor Own Damage' cover to another insurance company. However, features and coverage for both own damage and third-party will remain the same as before.

The Supreme Court in August 2018 had directed making long-term insurance plans mandatory for vehicles. Following the Supreme Court’s order, IRDAI issued a directive according to which, long-term Motor TP rules were applicable to vehicles bought after September 1, 2018.

First Published:Jul 31, 2020 1:03 PM IST