Mumbai: Car and bike owners in India could see major changes in motor insurance rules from December 15, 2026. According to the proposed changes described in reports, the Insurance Regulatory and Development Authority of India (IRDAI) will introduce a four-tier motor insurance system, allowing customers to select insurance coverage according to their needs.
The new framework aims to offer greater flexibility, transparency and clarity over insurance premiums while keeping third-party insurance mandatory.
Third-Party Cover
Under the new system, third-party motor insurance will remain compulsory for all vehicle owners. This coverage protects against legal liabilities arising from injuries or damage caused to others.
However, liability coverage for passengers and pillion riders will reportedly become optional, allowing customers to decide whether they need additional protection.
Flexible Insurance Options
Vehicle owners will also have the freedom to purchase Own Damage insurance separately.
This coverage protects vehicles against damage caused by accidents and other insured risks. Customers will not necessarily have to purchase all available covers together.
The proposed arrangement could help motorists customise policies according to their requirements and budgets.
Separate Premium Details
Insurance companies will reportedly be required to disclose premiums separately for each type of coverage.
This means policyholders will know exactly how much they are paying for third-party insurance, passenger liability and Own Damage protection.
Such disclosures are intended to improve transparency and help customers compare insurance options.
Mandatory Customer Documents
Under the reported framework, insurers must provide a Customer Option Form and an Information Sheet when issuing policies.
These documents will explain the available coverage options, applicable premiums and the protection selected by customers.
Existing Policyholders
Motorists who already hold third-party insurance policies will reportedly be allowed to add passenger liability coverage by paying an additional premium.
This would enable existing policyholders to expand their protection without purchasing an entirely new insurance package.
