Motor Insurance: Recent Regulatory Changes

The Indian Insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI) has recently brought about changes in the regulations governing motor insurance in India. Under the Motor Vehicles Act 1988, insurance cover for third party liability is mandatory for all motor vehicles at the time of purchase. However, until recently, this third party liability insurance had a mandatory term of one year, and was to be renewed by the policyholder on a yearly basis.

Recently, the Supreme Court of India directed in S Rajaseekaran v Union of India[¹] , that a long term motor insurance should be introduced and made mandatory at the point of sale and registration. Following the issuance of these directions, the IRDAI has extended the term of the statutory third party liability insurance to three and five years for private cars and two wheelers, respectively, with respect to new vehicles sold from 1st September 2018². Indian General Insurers were directed