What Are the IRDAI Guidelines for Car Insurance Plans?

The Insurance Regulatory and Development Authority of India (IRDAI) regulates the car insurance industry to ensure fair practices and transparency between insurers and policyholders. IRDAI establishes important rules that insurance companies must follow when offering car insurance plans.

These guidelines protect customers by ensuring they receive the right coverage, fair pricing, and quick claim settlements. Knowing IRDAI’s rules helps you make informed choices and select the car insurance plan that best suits your needs.

Latest IRDAI Guidelines for Car Insurance

The IRDAI regularly updates its rules to make car insurance easier to understand, more affordable, and fairer. Here are the key updates:

Changes in Long-Term Insurance Requirement

Earlier, new cars had to be insured with a 3-year long-term policy. Now, according to the new guidelines, owners can either:

a. Buy a 3-year Third-Party Liability (TPL) policy, and

b. Add a 1-year Own Damage (OD) cover separately.

Standardisation of No Claim Bonus (NCB)

Before, insurers could decide their own NCB rates for long-term policies.

Now, a standard NCB rate applies to all insurers, making it easier for customers to understand their bonuses.

RC Cancellation in Case of Total Loss or Theft

If a vehicle is stolen or declared a total loss, the car owner must submit the Registration Certificate (RC) to the insurer, and the RC will be cancelled.

New Terminology for Deductibles

The term “Compulsory Deductible” is now called “Standard Deductible.”

The fixed deductibles are:

• ₹1,000 for cars with engine capacity up to 1500cc
• ₹2,000 for cars with engine capacity above 1500cc

Passenger Cover Requirement

Each passenger in an insured vehicle should now have coverage of at least ₹25,000, as per the new rules.

Car Insurance Renewal Rules

• Car owners must renew their insurance before the expiry date.
• If the policy is not renewed within 90 days of expiry:
• No Claim Bonus (NCB) is cancelled.
• Damages during the gap period won’t be covered.

Total Loss Rule

A car is considered a total loss if repair costs exceed 75% of its Insured Declared Value (IDV), typically after major accidents or natural disasters.

General IRDAI Guidelines for Car Insurance

IRDAI ensures fair treatment of customers and insurers by setting clear rules for Third-party and Comprehensive Car Insurance plans.

➤ Third-Party Car Insurance

• This is mandatory in India and protects the owner from legal liabilities in case of injury, death, or property damage caused to others.
• The insurer must pay compensation for third-party injury, death, or property damage.
• In case of death, the Motor Accidents Claims Tribunal decides the compensation.
• Property damage is covered up to ₹7.5 lakhs.
• Personal Accident Cover compensates paid drivers in case of death or disability.

➤ Comprehensive Car Insurance

• Although optional, comprehensive policies offer better protection:
• Covers third-party liabilities.
• Covers theft and damages from accidents, natural disasters, fire, or explosions.
• Personal Accident Cover applies here too.

➤ General Exclusions

Certain cases are not covered by insurance claims:

• Mechanical or electrical breakdowns
• Normal wear and tear
• Intentional damage by policyholder
• Accidents under alcohol or drug influence
• Damage when policy is inactive
• Damage during illegal activities or street races
• Damage beyond geographic limits
• Violation of traffic rules

Depreciation & IDV Rules

• Depreciation reduces the vehicle’s value over time.
• IDV (Insured Declared Value) is the market value used for claim calculation.
• Higher depreciation lowers the IDV.

Standard depreciation rates by IRDAI are as follows:

IRDAI Timelines for Faster Service

IRDAI also sets specific timelines for a smooth and quick service experience:

• Claim Acknowledgement: Within 3 days of filing the claim.
• Survey Appointment: Within 72 hours of claim intimation.
• Survey Report Submission: Within 30 days after inspection.
• Claim Settlement: Within 30 days after receiving all documents.
• Grievance Redressal: Resolved within 15 days.

Conclusion

IRDAI guidelines ensure that car insurance in India is fair, transparent, and reliable. By following these rules, you can avoid confusion, make informed decisions, and get better service during claims.

Understanding these guidelines helps you choose the right car insurance policy, stay protected, and be aware of your rights as a policyholder.

For affordable and trustworthy car insurance plans, consider Square Insurance to ensure your vehicle stays protected with easy claim support and full compliance with IRDAI rules.