Purchasing car insurance in India can be con- fusing for vehicle owners. Rules laid by the Insu- rance Regulatory and Development Authority of India (IRDAI) impact the coverage you need and the policies available. Regulations governing third-party liability, comprehensive coverage, and recent rule changes affect the protection you need and the policies available. Continue reading to understand India's car insurance regulations and application requirements.

Understanding car insurance regulations in India

The Insurance Regulatory and Development Authority of India (IRDAI) governs car insurance regulations in India. The IRDAI sets guidelines and rules that insurer must follow when issuing and servicing car insurance policies. Car owners must understand these regulations to make informed decisions when purchasing coverage.

Minimum third-party liability coverage

Third-party liability car insurance is essential and compulsory in India. This coverage protects policyholders if their car causes injury or property damage to another person due to an at-fault accident. The insurer pays compensation on the policyholder's behalf, avoiding potentially significant out-of-pocket costs from legal claims or medical bills. Having this insurance is crucial for all vehicle owners.

Key regulations for third-party liability coverage

Here are some critical regulations around third-party liability coverage from the IRDAI:

• Insured must cover third-party losses

When driving, mistakes can happen. If a driver hurts someone in an accident that was their fault or damages another person's property, they could be sued by the victim or have to pay many bills. That's where third-party liability insurance comes in. The law requires all vehicle owners to have this coverage to protect themselves financially and legally if their vehicle causes injury or property damage due to negligence behind the wheel.

• Compensation for fatalities

If a third party dies due to an at-fault accident with the insured's vehicle, compensation must be paid to that person's next of kin. The amount is determined based on the deceased's earning capacity and age.

• Property damage limits

Claim payments for damage to third-party property are capped at INR 7.5 lakh per accident. This limit applies to combined payments for damage to multiple properties.

Comprehensive coverage guidelines

In addition to mandatory third-party liability coverage, Indian motorists can choose comprehensive policies covering theft of the insured vehicle and damage from accidents, floods, fire, and other causes.

Key regulations for comprehensive coverage

IRDAI regulations state that insurers must abide by the following for comprehensive policies:

• Include third-party provisions

Comprehensive policies must contain all the same protections as mandatory third-party liability coverage outlined earlier.

• Cover vehicle theft

If a policyholder's car is stolen, the insurer must reimburse them up to the insured amount, provided the claim is valid.

• Pay for covered damage

For approved claims stemming from accidents, natural disasters, fire, and covered circumstances, the insurer must pay the policyholder's car repair costs up to the insured amount.

• Customer service regulations

To protect policyholders, IRDAI rules define timeframes for insurers, including issuing policy documents within 15 days, sending proposal copies in 30 days, appointing a surveyor within 72 hours of a claim, conducting a survey within 48 hours of assignment, and settling or rejecting allegations within 30 days of receiving the survey report.

• Depreciation calculation rules

The Insurance Regulatory and Development Authority of India (IRDAI) has prescribed fixed depreciation slabs that insurers must adhere to when settling cashless claims under comprehensive policies. These depreciation rates account for a vehicle's everyday wear and tear as it ages. For cars less than six months old from the date of manufacture, a 5% depreciation rate applies.

This rate gradually increases on a fixed schedule based on the age of the vehicle from the time of original purchase. For cars between 6 and 12 months old, a 15% depreciation rate applies. For 1-2-year-old vehicles, a 20% depreciation rate is applied. Depreciation increases to 30% for 2-3-year-old vehicles, 40% for cars 3-4 years from purchase date, and 50% for 4-5-year-old vehicles.

These slabs only apply to the expiration of a manufacturer's warranty. Once a vehicle exceeds five years from its original purchase date, insurers may apply additional depreciation as per their individual policies' terms.

Updates to insurance rules

The IRDAI routinely reviews and updates regulations to improve policyholder protections and industry practices. Here are some key recent amendments:

• 3-year third-party, annual own damage

New vehicles must have three years of mandatory third-party liability protection upon purchase. Own damage cover can be purchased annually. 

• Standard NCB, deductibles

Insurers now follow standardised no-claims bonus (NCB) criteria. Also, compulsory deductibles are now called “standard deductibles” and are set at INR 1,000 for cars under 1,500cc engines and INR 2,000 for larger engines.

• RC cancellation after total loss

When a car is stolen or declared a total loss, the registered certificate (RC) must be submitted to the insurer to be cancelled to prevent fraudulent resale.

• Minimum PA cover 

All passengers in insured cars now have a minimum coverage of INR 25,000 for bodily injury.

Insurance application requirements

When arranging car insurance online or through an agent, gathering key details before time is essential to ensure a smooth application process. You'll want your vehicle details, such as make, model, age, safety features, driver's license number and driving history, loan or lease documents if financed, and information on anti-theft devices or other modifications.

Getting quotes requires entering specifics like annual mileage estimates and coverage needs. Information regarding past insurance coverage also helps speed the process and achieve the most accurate pricing. Collecting this information before starting an application prevents delays from needing to track down vehicle identifiers, driving records, and financing details. With all the pertinent data ready, car insurance sign-up and quotes only take minutes.

Conclusion

Understanding India's insurance regulations helps car owners make informed decisions, whether opting for basic third-party or comprehensive coverage. The application process moves swiftly by gathering vehicle details, driving history, and past insurance information ahead of time.