Car and bike insurance rules to change from December 15; know these 5 things before renewing your policy..

If you own a car or a bike, this news is relevant to you. Major changes to motor insurance regulations are on the horizon. The Insurance Regulatory and Development Authority of India (IRDAI) is preparing to implement new motor insurance rules effective December 15, 2026. Under this framework, insurance for cars and two-wheelers will be divided into four distinct components. The objective of this change is to enhance the transparency of insurance policies and help customers understand exactly what they are paying premiums for. These new policies are also expected to be available on the 'Bima Sugam' platform. Therefore, if you are planning to renew your vehicle insurance, do not base your decision solely on the premium amount; understanding these five key points could prove beneficial.

Understand the distinction between mandatory and optional insurance covers.
The new structure divides motor insurance into four parts: third-party liability, legal liability coverage for passengers, personal accident cover, and coverage for damage to the vehicle itself. Third-party insurance and personal accident cover for the vehicle owner-driver will remain mandatory. Conversely, 'own-damage' cover (which protects your vehicle from damage) and legal liability cover for passengers will be optional, allowing customers to select additional protection based on their specific needs.

Check coverage for passengers and pillion riders.
The new regulations introduce an optional legal liability cover for passengers in cars and pillion riders on motorcycles. However, certain conditions apply: this coverage does not extend to the vehicle owner, the insured individual, or their immediate family members—specifically a spouse, parents, or children. Furthermore, the policy will only cover a number of passengers consistent with the seating capacity specified in the vehicle's Registration Certificate (RC). Therefore, when purchasing insurance, ensure that those who regularly travel in your vehicle are adequately protected.

Check for Personal Accident Cover
A Personal Accident Cover is essential for the vehicle owner-driver. However, if you wish to provide financial protection in the event of an accident to other drivers, passengers, or a pillion rider (in the case of a two-wheeler), you may opt for additional coverage. Make this decision based on your specific needs; for instance, if family members frequently travel in your car, obtaining additional protection for them could be beneficial.

Do Not Overlook 'Own Damage' Cover, IDV, and Deductibles
'Own Damage' cover protects your vehicle against losses resulting from accidents or theft. While not mandatory, it can be highly advantageous, considering the vehicle's age, current market value, and potential repair costs. It is also important to understand the IDV (Insured Declared Value)—the insured value of the vehicle, which serves as the basis for calculating compensation in the event of a total loss or theft. A 'deductible,' on the other hand, is the amount the vehicle owner must pay out-of-pocket when filing a claim. Consequently, carefully evaluate both of these aspects when selecting a policy.

Review the Premium Breakdown and Documentation
Under the new framework, insurance companies are required to provide a detailed breakdown of the premium for each component of the policy. This allows customers to understand the specific costs associated with various covers, such as Third-Party, Personal Accident, and 'Own Damage' insurance. Furthermore, customers will be provided with a Customer Information Sheet (CIS), which outlines the coverage offered under the policy and its associated terms and conditions. Additionally, a 'Customer Option Form' will allow policyholders to specify exactly which insurance covers they wish to opt for. 

Additional cover can be added to existing policies.
The new regulations also include provisions to provide relief to existing policyholders. If a customer wishes to obtain legal liability coverage for passengers or a pillion rider during the policy term, they can add it to their existing policy by paying an additional premium. There is no need to terminate their current third-party insurance policy to do so.

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