New Delhi, November 2026 : The Insurance Regulatory and Development Authority of India (IRDAI) has directed general insurance companies to introduce a new four-part motor insurance framework for private cars and two-wheelers from December 15, 2026. The revised structure aims to improve transparency, provide greater flexibility and help vehicle owners make informed decisions while purchasing motor insurance.
Issued in compliance with a Supreme Court directive, the new framework will separate compulsory third-party liability insurance from additional covers relating to passengers, personal accidents and damage to the insured vehicle. This will enable customers to understand the protection offered under each component and the premium charged separately.
Four-Part Motor Insurance Structure
Under the revised framework, motor insurance policies will be divided into four distinct components:
Third-party liability cover: This will remain compulsory under the Motor Vehicles Act and cover the vehicle owner's legal liability for injury, death or property damage caused to third parties in an accident.
Legal liability towards occupants or pillion riders: This optional cover will protect passengers travelling in private cars and pillion riders on two-wheelers. Employees travelling in the insured vehicle can also be covered. The number of occupants covered cannot exceed the vehicle's registered seating capacity.
Personal accident cover: Personal accident insurance for the owner-insured will continue to be mandatory. Additional personal accident protection for other occupants, pillion riders and drivers other than the owner-driver can be purchased separately.
Own-damage cover: This optional component will cover loss of or damage to the insured vehicle, allowing owners to decide whether they want protection for their own vehicle in addition to third-party insurance.
Standardised Policy Documents to Improve Transparency
To ensure uniformity and improve customer awareness, IRDAI has directed all general insurers to adopt standardised policy wordings and introduce a uniform customer option form for private cars and two-wheelers.
Customers will have to indicate their preferred insurance covers by completing the prescribed form, either online or offline. The completed form will become an integral part of the insurance policy, providing a clear record of the coverage selected by the policyholder.
Insurance companies will also be required to issue a Customer Information Sheet (CIS) at the time of policy purchase. The document must explain the coverage available under each section and separately disclose the premium charged for every component. This will help policyholders understand the protection included in their policies and identify additional covers they have chosen not to purchase.
Existing Policyholders Can Add Passenger Cover
The revised framework also provides flexibility to existing third-party motor insurance policyholders. Those wishing to add legal liability coverage for passengers or pillion riders will be allowed to do so during the policy period by paying an additional premium.
They will not be required to cancel or replace their existing third-party insurance policy. However, the additional coverage must be purchased from the same insurance company that issued the original third-party policy.
The new protection will become effective from the date and time specified in the endorsement issued by the insurer.
While the policy structure and wording will be standardised, insurance companies will retain the flexibility to introduce additional coverage options and determine premiums for own-damage policies based on market conditions.
Integration with Bima Sugam
IRDAI has further directed general insurance companies to integrate the new four-part motor insurance framework with Bima Sugam, the proposed digital insurance marketplace, to ensure that the revised policies are available on the platform from December 15, 2026.
The new framework implements the Supreme Court's directions in the case of National Insurance Company Ltd vs Thungala Dhana Laxmi and Others. The changes are intended to ensure that vehicle owners have a clear understanding of available motor insurance options and can make informed decisions while purchasing coverage.
The move is expected to strengthen transparency in the motor insurance sector, improve customer choice and make the distinction between mandatory and optional vehicle insurance covers easier to understand.
(Disclaimer :The content of this article is sourced from a news agency and has not been edited by the Mavericknews30 team.)
