NEW DELHI: Following a Supreme Court order, the Insurance Regulatory and Development Authority of India (IRDAI) has allowed insurers to issue standalone annual Own Damage (OD) cover for cars and two-wheelers from September 1. OD covers natural calamities such as earthquakes and floods, and also disasters such as vandalism and riots.
“Effective, September 1, 2019, insurers shall make available standalone annual own damage covers (including standalone OD cover for fire and/or theft [GR 45 A and 45 B] if opted for by the policyholder) for cars and two-wheelers, both new and old,” IRDAI said in a statement on Friday, while amending an earlier order.
Consequently, the issuance of bundled policies for cars and two-wheelers will not be compulsory from September 1. Further, insurers will have the option to offer package policies, in addition to standalone OD and TP (Third Party) policies.
Long-term standalone OD policy won’t be permitted now. As for policyholders, they will have the option to renew the OD component of a bundled cover falling due on or after September 1, with the same insurer or a different insurer, on an annual basis, the IRDAI circular said.
For issuance of standalone OD annual cover as well as for renewal of the OD component of a bundled cover, insurers shall ensure that OD cover is offered only if a Motor TP cover is already in existence or is taken simultaneously.
The pricing of a standalone OD policy shall continue to be that being offered for the OD component of a package policy (the same was followed for the OD component of a bundled product as well). The name of the insurer, policy number and the start and end dates of the TP policy shall be indicated in the OD policy document.
Onkar Kothari, company secretary and compliance officer, Bajaj Allianz General Insurance, said the circular has provided the much-needed clarity in terms of insurers’ approach to standalone motor OD policy, its pricing and duration.
“It’s going to be an annual policy. It has also made it mandatory for insurers to ensure that no vehicle should be insured only for OD cover and the insurer needs to mention start and end dates of TP policy,” he said, adding that the IRDAI circular provides clarity to the customers who have opted for a bundled cover.