3-5 year TP vehicle insurance: A welcome move by IRDAI

The Insurance Regulatory & Development Authority of India (IRDAI) has asked general insurance companies to submit third party vehicle insurance policies offering 3-year and 5-year insurance for cars and two-wheelers, respectively, and offer these options to their customers. The IRDAI directive to the insurers comes in the wake of the recommendation made by the Committee on Road Safety of the Supreme Court.

The IRDAI move will provide a big relief to the vehicle owners when the insurance companies launch these 3-year and 5-year policies. However, it must be noted that the 3-year and 5-year insurance covers are proposed to be introduced for only third party insurance, which is mandatory by law, and not for comprehensive insurance policies. Currently, insurance companies offer comprehensive vehicle insurance policies for car for a maximum of one year and for two-wheelers for a maximum of three years.

However, even if the extended period is for third party insurance cover only, it is still a welcome move because, for the vehicle owner, it will reduce the hassle of renewing the insurance policy every year. Also, the 3-year and 5-year policies may prove to be economical too as the insurers may offer these at some discounts. Besides, the locking in of the premium amount for a period of 3 or 5 years will protect the policyholders from any future hikes in the premium amount. Also, once the vehicle owner buys a policy for 3 or 5 years, he will not have to remember the renewal date every year and will enjoy peace of mind till the next renewal date.