New Delhi, November 4, 2026 (Yes Punjab News)
The Insurance Regulatory and Development Authority of India (IRDAI) has introduced a four-layer structure for motor insurance policies covering private cars and two-wheelers, giving customers greater flexibility to select coverage according to their needs. The revised framework will come into effect from December 15, 2026.
Under the new system, motor insurance policies will be divided into four distinct components: third-party liability, legal liability for occupants or pillion riders, personal accident cover and own-damage protection for the insured vehicle.
While third-party liability insurance will continue to be mandatory, the remaining covers will generally be optional, subject to existing rules governing compulsory personal accident insurance for vehicle owners.
The regulator said the restructuring is intended to improve transparency and help policyholders understand the coverage they are purchasing.
IRDAI has directed all general insurers to adopt standardised policy wording for private cars and two-wheelers and introduce a uniform customer option form. Buyers will be able to use the form, through online or offline channels, to select the covers they require.
Insurers will also have to provide a Customer Information Sheet at the time of purchase, clearly listing the coverage under each component and the corresponding premium.
Existing policyholders will be allowed to add legal liability cover for occupants or pillion riders during the policy period by paying an additional premium.
Although policy wording and structure will be standardised, insurers will retain the flexibility to develop new products and determine premiums for own-damage coverage according to market conditions.
The regulator said the circular had been issued in compliance with a Supreme Court order in the case of National Insurance Company Ltd versus Thungala Dhana Laxmi and others.
IRDAI has also directed insurers to integrate the revised four-layer structure with the Bima Sugam platform to ensure the products are available there from December 15.
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