IRDA allows three-year insurance for 2-wheelers

MUMBAI: If you own a two-wheeler, you can now choose to insure your vehicle for  three years in one go instead of renewing the insurance policy every year. 

The insurance regulator has made this possible by allowing general  insurance companies to offer third party insurance for two-wheelers for a term  of up to three years instead of one year. The earlier policy led to the  unintended consequence of many two-wheeler owners refraining from renewing the
policy after first year.

In its revised guidelines, the Insurance Regulatory and Development Authority of  India (IRDA) said for three years insurers can charge three times the annual  third party premium for two-wheelers as prescribed by them. IRDA barred insurers from revising premium on  policy upward or downward during period of policy. "In effect, the policy will  be inflation neutral and will thus benefit the policy-holders," said Rakesh Jain, CEO of Reliance General Insurance.

It is estimated that half of the two-wheeler owners have not insured their  vehicles, which is harmful for individuals as well as insurance companies. This  is mainly because India follows a policy of providing unlimited third party  cover in case of any road accident while general insurance companies contribute  towards third party motor pool. Insurers have been urging IRDA to allow them to  offer a longer term cover for motor insurance since claims have been high in  this segment, especially since many vehicle owners have not taken any cover although it is  mandatory.

"Three-year cover for two wheelers is only starting point.  IRDA may extend it to other vehicles in due course of time," said KK Mishra, MD  and CEO of Tata  AIG

Source : http://economictimes.indiatimes.com/