New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI), the insurance sector regulator of the country, has stopped the practice of long-term insurance plans being bundled with new vehicle purchases.
The decision, to be effective from August 1, is likely to cause a drop in the on-road price of vehicles.
The IRDA is stopping long-term ‘own damage’ insurances.
(The vehicle insurance has two components – third-party insurance and own damage insurance. The law in India only mandates third-party insurance. The IRDAI had suggested some time ago that insurers provide long-term own damage insurances with the third-party ones. But following an SC directive, the IRDAI advised insurers to provide own-damage policies of one year).
This order will enable vehicle users to take own-damage insurance from companies of their choice every year rather than sticking to one service provider for three years, which is the usual term of any new insurance.
The on-road price of vehicles used to go up by a few thousands due to the insistence of certain companies on three-year own damage insurance.
Also, the cost reduction and its subsequent benefit transfer to the actual customers is also expected to rejuvenate the car and two-wheeler sector reeling under the COVID pandemic.
BS-IV registration halted
The Supreme Court also ordered that the registration of BS-IV vehicles be stopped in the country immediately.
The bench headed by Justice Arun Mishra said the registrations be halted temporarily as the sale had exceeded the quota set by the apex court.
The court had allowed the sale of BS-IV vehicles with certain riders on March 27. The court said only 1.05 lakh vehicles should be sold but over 2.55 lakh vehicles were found sold.
The court said action would be taken against offenders. The Federation of Automobile Dealers had sought the consent of the court to import vehicles that could not be sold in India.
The court said the vehicle manufacturers were aware of the time limit set by the court and such an order cannot be issued. The court will hear the matter again on August 13.