Can standalone OD vehicle insurance coverage remain legitimate if 1/3-celebration insurance expires earlier?
Last 12 months, the Insurance Regulatory Development Authority of India (IRDAI) issued new guidelines for motor insurance policies for brand spanking new vehicle proprietors (i.E., people who offered vehicles on or after September 1, 2018). Insurers are now allowed to offer stand-by me annual own damage (OD) insurance regulations (such as stand-alone own harm coverage for fire and/or robbery) for automobiles and two-wheelers, both new and antique.
Till September 1, 2018, only sorts of motor coverage rules have been to be had wherein vehicle owners ought to both buy a 3rd-birthday party cowl for his or her car or buy complete insurance coverage which blanketed OD insurance policy and 0.33-birthday party coverage for 12 months.
However, on and after September 1, 2018, IRDAI allowed insurers to offer long-term motor insurance guidelines and made long-time period third-celebration coverage compulsory for brand new vehicle owners.
Thereafter, new car owners who bought the compulsory long-term 1/3-birthday celebration cover for his or her vehicles had the option of buying any individual of the three types of coverage rules.
Type 1. A long-time period comprehensive coverage policy which might offer three-year complete covers for motors. This complete cover includes each vehicle OD coverage and 1/3-birthday celebration coverage.
Type 2. A bundled cover with a three-12 month 1/3-birthday celebration cover and a 1-year time period for OD cowl for cars. So, if to procure this cowl remaining 12 months, then your OD cover would be expiring a while now.
Insures have now been allowed by way of IRDAI to provide one-12 months standalone OD cowl to new vehicle owners from September 1, 2019. Therefore, now they could renew/purchase their own harm aspect by using shopping 1-year standalone OD policy from the same or unique insurer.
Type three. A standalone lengthy-term 1/3-birthday party coverage. If you’ve got sold only lengthy-term 1/3-celebration motor coverage without OD cover, you can now purchase 1-year OD cover if you want to.
Now, this is the query that arises: what occurs if the proprietor needs to buy OD coverage after some time of buying the 1/3-celebration cover? Alternatively, what if the brand new car owner does now not renew the standalone OD coverage on expiry of the preceding 1-yr OD coverage, however, buys a brand new OD policy after a time hole?
In a state of affairs like this, the standalone 1-yr OD coverage can also expire after the third-party policy expires on the cease of the 3 years of the latter’s term, i.E., there will be a time period whilst the third-birthday celebration coverage would have expired (except renewed) however the OD policy time period could not have expired.
So, will the standalone 1-12 months OD cover remain valid for a vehicle if its third-birthday celebration insurance expires earlier than? Or, will the insurer issue the standalone 1-12 months OD coverage on a pro-rata basis so that standalone 1-yr OD coverage and the third-party coverage cover expires at the same date?
Currently, in India, it’s far obligatory for automobile proprietors to shop for 1/3-birthday celebration insurance, and consistent with the new IRDAI tips, you could best buy a standalone 1-12 months OD policy if you already have a motor 0.33-party cover or take it simultaneously. However, within the notification, IRDAI has now not cited for a way lengthy (the time period of the coverage) one has to shop for standalone 1-yr OD coverage if one misses the renewal date of the previous OD coverage and buys it after a month or so.
Here’s what insurance experts have to say.
Some insurers say that OD cowl has to be co-terminus with 1/3-birthday celebration cover.
According to IRDAI guidelines, one of the situations of promoting or buying a standalone OD cowl is that the call of the insurer, policy number and the start date and give up date of the 1/3-celebration coverage that you already have sold concurrently needs to be particular within the Own Damage coverage record.
In view of this statement, Kapil Mehta, CEO, Secure now. In, a Delhi-based coverage broker, said that the insurer cannot issue a policy wherein the OD coverage quit date exceeds the third-celebration policy give up date, as for an OD policy to be legitimate it is required to be bundled with a 3rd-birthday celebration policy. “If you buy a 3rd-celebration coverage that is issued for a time period of three years and for some reasons you do no longer buy an OD coverage, the insurer can trouble an OD coverage on pro-rata basis either in the starting or ultimately of the third-party coverage duration, supplied the stop date of the standalone OD coverage does no longer enlarge the end date of the 0.33-birthday party policy.”
Mehta explains, if a motor vehicle owner ‘A’ purchases a third-birthday party policy as on July 1, 2019, the policy stop date can be June 30, 2022. Now if ‘A’ needs to buy an OD policy on October 1, 2019, the insurer can either difficulty an OD coverage on pro-rata foundation from October 1, 2019, to June 30, 2020, followed through 2 annual OD policies or October 1, 2021, to June 30, 2022, after annual OD policies. In each the instances, the circumstance of OD coverage quit date not exceeding the 0.33-birthday celebration policy end date will be met.
Devendra Rane, Founder & CTO, Coverfox.Com stated that as according to IRDA ruling for quick-term regulations, each OD cover and third-party charges may be charged for any length of the cover. This can be utilized by a coverage employer to both create a short-time period 1/3-celebration coverage for the period identical to the distinction of OD cover and 0.33-celebration expiry, or an OD cover may be created on a seasoned-rata basis to suit the balance time period of the third-celebration cover, he stated. It might be a selection that an insurer could take according to the want of imparting the fine user experience, in keeping with Rane.