Earn discount on long-term motor insurance policy

Two-wheeler owners can soon buy a motor insurance policy for a period of three years. The New India Assurance Co has got approval from Insurance Regulatory and Development Authority (Irda) to launch a comprehensive long-term policy. The good part is you could earn a discount of upto 15% on such policies.

Mohd Zafir Alam, general manger, The New India Assurance, says, "We have received approval for a comprehensive motor insurance policy. A discount of upto 30%* would be given to customers for a long-term policy over and above no-claim bonus and underwriting benefits." The move will also help insurers in cutting down their administrative costs. The policy will be launched shortly.

Moreover, insurers will not be able to revise the rates during the tenure of the policy, even if you make a claim during the tenure of the policy.

Yashish Dahiya, co-founder and chief executive offer, of policybazaar.com, says, "It is good for policyholders who are not very diligent in renewing their policy every year. Going forward many more companies should launch a three-year policy for two-wheelers."

Motor insurance cover has two components: own damage and third party insurance. While own damage cover protects your vehicle against damage and theft, third party cover protects losses to a third party.

Third party premium rates are revised every year. For financial year 2015 rates have been increased by 20% for private cars and by 10% for two-wheelers.  For example for private cars - with engine not exceeding 1000 cc, the rates increased by Rs 188 from Rs 941 last year to Rs 1,129. Similarly, for private cars exceeding 1000 cc but not more than 1500 cc, rates got increased from Rs 1,110 to Rs 1,332.

*An earlier version of the story carried the discount figure wrongly as 15%. The correction has now been made.