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The Insurance Regulatory and Development Authority (IRDA) is a government body that regulates and oversees the functioning of the insurance sector in India. It issues guidelines which have to be followed by all the insurance companies for different insurance products such as personal, life insurance, motor insurance, etc. The rules set by IRDA must be complied with by the policyholders and insurance companies since it ensures faster processing when it comes to the settling genuine claims, grievance redressal, elimination of unethical practices and prevention of car insurance fraud.
Motor insurance covers insurances related to private cars, two wheelers, commercial vehicles and different types of road transport vehicles. Owning a motor insurance policy is mandatory in India. It is a punishable offense to drive a vehicle without having a valid insurance plan according to the Motor Vehicles Act, 1988. When an individual avails insurance policy, he gets a certificate of insurance by the insurer as per Rule 141 of Central Motor Vehicle Rules, 1989.
The motor insurance policies provide coverage to the policyholders against:
There are two types of motor insurance policy coverages for the vehicle owners:
This table provides a list of liabilities which are covered under a Comprehensive Package Policy:
Natural Disasters |
Man-made Disasters |
Lightning |
Burglary |
Fire |
Theft |
Floods, Earthquakes, Cyclones, Storms, Tempests, Hurricanes, Frost, Hailstorm and Inundation |
Self-Ignition |
Landslides and Rockslides |
Riots, Terrorism and Malicious Acts while the vehicle is in transit through any means of transport Accidental External Sources |
These are some add-ons that generally come with Comprehensive Motor Insurance Policy:
Motor insurance companies must follow guidelines issued by IRDA while offering motor insurance policies to the customers. Customers should only purchase motor insurance policies from companies with IRDA license/certification.
The following are the guidelines given by IRDAI for comprehensive car insurance cover:
Having a third party liability car insurance policy is mandatory by IRDAI. This policy provides coverage to the car owners in case of third-party losses. There are some key rules regarding this type of insurance which are mentioned below:
Here is a list of general exclusions of a car insurance policy:
IRDAI regularly updates the guidelines regarding motor insurance. Here are the recent changes in its rules:
IRDAI has set some rules for car insurance renewal which need to be followed by the car owners. To avail continuous coverage, the policy must get renewed on time. In case there is a gap, the insurance company is not liable to give financial assistance for damages that occurred when the policy is not active. If the car owner does not renew the insurance policy of his car within a period of 90 days since the policy expired, any applicable No Claim Bonus will drop to 0.
When the repair cost is extremely high, a car is considered to be a total loss. This can happen in case of major accidents or natural disasters such as floods, earthquakes, etc. The total calculation is directly connected to the Insured Declared Value (IDV) of a car which is declared by the owner when he is purchasing the policy. The insurer has the right to declare a total loss if the repair costs exceed 75 percent of the IDV according to IRDAI.
As the car gets older, there is a reduction in its monetary value known as depreciation. Depreciation is a major factor in determining the amount of the claim.
This table mentions the rates associated with depreciation as per IRDAI:
Up to 6 months |
5% |
6 months -1 year |
15% |
1 year - 2 years |
20% |
2 years - 3 years |
30% |
3 years - 4 years |
40% |
4 years - 5 years |
50% |
The sum insured is determined in case of own damage coverage as stated below:
Certain timelines have been defined by IRDAI which need to be followed by the insurance companies as well as the policyholders. These can be regarding claims, complaints, etc.
Here’s a list will all the services and the timeline for each one of them:
Services |
Timeline |
Issuance, processing and Cancellation of policies |
15 days |
Issuance of proposal copy |
30 days |
Services after issuance of policy/Refund of proposal deposits/ Non-claim requests |
10 days |
Survey report submission |
30 days |
Addendum Report for the insurer |
15 days |
Settlement or rejection of claims after the receipt of addendum report |
30 days |
Acknowledgement of grievance (calculated from the date of grievance received) |
3 days |
Resolution of grievance (calculated from the date of grievance received) |
15 days |
IRDAI is the regulatory authority for overseeing the functioning of the insurance sector in India. Guidelines issued by IRDAI must be followed by all the insurance companies and policyholders since it ensures faster processing when it comes to the settlement of genuine claims and elimination of unethical practices. We hope this article was helpful. In case of any additional help regarding insurance policies or IRDAI’s services such as licensing and certification, you can connect with the team experts of Registrationwala.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.