The Insurance Regulatory and Development Authority of India (IRDAI) mandated a four-tier motor insurance structure for private cars and two-wheelers on November 3, 2026. The framework takes effect on December 15, 2026, following Supreme Court directions in National Insurance Co. versus Thungala Dhana Laxmi.
Four components and cover options
The policy separates third-party liability, legal liability towards occupants or pillion riders, personal accident cover, and loss of or damage to the insured vehicle (own-damage cover). Third-party liability and personal accident cover for the owner-insured remain mandatory. Legal liability towards occupants or pillion riders, additional personal accident cover for occupants, pillion riders or other drivers, and own-damage protection are optional.
Uniform policy documents and Bima Sugam
From December 15, all general insurers except standalone health and specialised insurers must use uniform policy wordings for private vehicles and provide a customer option form and Customer Information Sheet (CIS) at the point of sale. Insurers must also complete integration with Bima Sugam so the policies are available on the platform from that date. The framework aims to give customers flexibility, support informed choices and disclose each cover’s premium. Insurers retain flexibility to price own-damage cover in line with market conditions and innovate on coverage.
Important Facts for Exams
- Motorcycle risk profile: Motorcycle insurance may have lower property-damage premiums but higher liability or personal-injury premiums, reflecting riders’ different physical risks.
- No-fault motor compensation: Section 164 of the Motor Vehicles Act provides compensation for death or grievous hurt without requiring proof of wrongful act, neglect or default.
- Motor-claim jurisdiction: Section 175 of the Motor Vehicles Act bars civil courts from deciding questions that a Motor Accident Claims Tribunal is empowered to adjudicate.
- Insured declared value: For private-car own-damage policies, insured declared value is the sum insured; for vehicles up to five years old, it derives from listed price less prescribed depreciation.
