Hyderabad:
Giving relief to the auto owners, the insurance regulator on Friday said, effective from 1st September, 2019, general insurers have to make available stand-alone annual Own Damage covers (including stand-alone OD cover for fire and/or theft if opted for by the policyholder) for cars and two-wheelers, both new and old.
Consequently, effective from 1st September, 2019, the issuance of bundled policies for cars and two-wheelers will not be compulsory.Further, insurers will have the option to offer package policies, in addition to stand-alone OD and third party (TP) policies. Long term stand-alone OD policy will not be permitted for the present.
Earlier, the IRDAI circular had set out that the guidelines regarding Motor OD 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 OD bundled with long term TP cover for new car/ new two-wheeler, as applicable.
Bundling of cover for the OD portion was permitted as an immediate requirement, keeping in view the date of implementation stipulated by the Supreme Court from 1st September, 2018, said IRDAI .
Further, policyholders have the option to renew the Own Damage component of a bundled cover falling due on or after 1stSeptember, 2019,with the same insurer or different insurer, on an annual basis. said IRDAI.
For issuance of stand-alone Own Damage annual cover as well as for renewal of the Own Damage component of a bundled cover, insurers has to ensure that OD cover is offered only if a Motor TP cover is already in existenceor is taken simultaneously. The name of the insurer, policy number and the start date and end date of the TP policy will have to be indicated in the OD policy document. 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 will continue to be that being offered for the OD component of a package policy (the same was followed for the OD component of a bundled product as well).
However, should the insured take a 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. Needless to say, this shall apply to annual package and stand-alone TP policies also.
Commenting on Irdai's order, Onkar Kothari, Company Secretary and Compliance Officer, Bajaj Allianz General Insurance said the circular has provided much needed clarity in terms of insurer's approach for standalone motor OD policy, its pricing and duration.
"It's going to be an annual policy. It has also made it mandatory for insurers to ensure that no vehicle should be insured only for OD cover and the insurer needs to mention start and end date of TP policy and name of its issuer while giving standalone OD policy," he said.