Regulator to Come Out with New Vehicle Insurance Policies

The national insurance regulator and General Insurance Company (GIC) will come out with a policy, which will make it mandatory for everyone buying a new vehicle to pay the third party insurance premium for three and five years for car and two-wheelers respectively upfront, at the time of registration.They will also design and market separate policies for third party, own damage and comprehensive vehicle insurance. This will allow vehicle owners to choose any of the product over and above the third party insurance, which is mandatory. It will also help states to compel every owner to have third party insurance for their vehicles.

Third party insurance premium is only around one-third of the total premium one pays for composite insurance cover. Insurance Regulatory and Development Authority (IRDA) and GIC have assured taking these steps to a Supreme Court committee on road safety after the panel made these recommendations. These moves gain importance considering that over 45% of vehicles plying on roads are uninsured and victims of road crash involving such vehicles run the risk of getting no compensation.This is far more critical as more than 60% of two-wheelers have no insurance cover and these vehicles are responsible for every fourth road death in India.

GIC has told the SC panel that till December end about eight crore of the total 14 crore plying on roads have insurance cover. It has also urged the panel to instruct state governments to carry out checking and identification of uninsured vehicles on quarterly basis.

Early this month a parliamentary standing committee had recommended the government to consider a framework to make third party insurance one-time affairs as it is in the case of vehicle registration tax. It had suggested that every new vehicle purchased should be made to pay this amount at the time of registration.