IRDAI Withdraws Long-term Motor Policies — What Changed
Updated: August 1, 2020 · By InsureM
IRDAI has discontinued long-term motor own-damage policies for new vehicles from 1 August 2020. This includes:
- 3-year own-damage cover for cars
- 5-year own-damage cover for two-wheelers
What Changed?
Earlier, new vehicle owners bought long-term motor policies at dealerships. Now, only annual motor own-damage policies are allowed.
Why IRDAI Withdrew These Policies
- Difficult for insurers to estimate long-term risk
- Operational challenges for distribution and servicing
- Reports of forced selling at dealerships
- Uneven handling of No Claim Bonus (NCB)
IRDAI decided annual renewals are better for customers and insurers.
Impact on Vehicle Owners
- More control — compare policies every year
- Pay yearly instead of upfront for 3–5 years
- Can switch insurers easily if service is poor
- NCB carried forward yearly
Impact on Dealers
Dealers will now sell only standard annual insurance plans. This helps avoid forced selling and brings transparency.
Benefits of Annual Motor Insurance
- Lower upfront cost
- Better claim service control
- Competitive pricing every year
- Choose add-ons yearly (zero-dep, engine protect, RSA, etc.)
- Smoother NCB tracking
FAQs
Q: Are long-term OD policies mandatory now?
No, they were discontinued from 1 Aug 2020.
Q: Can I still buy 3-year or 5-year motor insurance?
You can only buy long-term third-party cover, not long-term own-damage packages.
Q: Will my existing long-term policy continue?
Yes, it remains valid until expiry.
Q: What about No Claim Bonus (NCB)?
NCB continues yearly and can be transferred at renewal.
Summary
IRDAI withdrew long-term OD policies to ensure better pricing, transparency, and smoother servicing. Annual renewal helps customers compare and get better deals.
Stay informed — compare motor insurance yearly and keep your NCB safe.
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