Understanding the Latest IRDAI Regulations for KYC in Car Insurance
New IRDAI regulations for KYC in car insurance: What you need to know?
Know Your Customer (KYC) is a mandatory requirement introduced by the Insurance Regulatory and Development Authority of India (IRDAI) for all car insurance policies and has been applicable from January 1, 2023. As per the IRDAI guidelines for KYC, anyone buying or renewing a car insurance policy must submit valid personal identification documents for identity verification. This verification must be completed before the policy is issued or renewed. The objective of compulsory KYC is to reduce cases of fraud, ensure accurate customer records, and bring greater transparency to insurance transactions. It also helps insurers maintain verified policyholder details, which is important for smooth policy servicing and claim handling.
For customers, timely completion of KYC helps avoid issues such as delays in policy issuance, renewal interruptions, or complications during claim settlement. Being aware of the KYC requirement ensures that the car insurance process remains compliant and hassle-free.
What is KYC in car insurance, and why is it important?
KYC (Know Your Customer) in car insurance is a process used by insurers to verify the identity and address of a policyholder through approved government-issued documents, in line with IRDAI guidelines. This verification is required when buying a new car insurance policy as well as during renewals, ensuring that policyholder details are accurate and up to date.
Importance of KYC in car insurance:
Confirms the policyholder's identity and address
Helps prevent fraudulent policie, claimss and identity misuse
Ensures compliance with IRDAI regulatory requirements
Supports smoother policy servicing and faster claim settlements
Completing KYC on time helps avoid delays in policy issuance or renewal and reduces complications during claims. It also ensures that car insurance coverage remains active, secure, and compliant with regulatory norms.
Which KYC documents are required for car insurance?
As per IRDAI guidelines, policyholders must submit valid KYC documents for car insurance to verify their identity and address. The commonly accepted documents and their purpose are listed below:
Document type | Purpose | Notes
|
|---|---|---|
Aadhaar Card | Proof of Identity and Address | Should be valid and clearly readable |
PAN Card | Proof of Identity | Form 60 may be used if PAN is not available |
Passport | Proof of Identity and Address | Valid Indian or OCI passport accepted |
Voter ID Card | Proof of Identity and Address | Must be issued by a government authority |
Driver’s License | Proof of Identity and Address | Accepted across India |
Job Card under NREGA | Proof of Identity | Must be signed by authorised officials |
Proof of Address (PoA) | Required if address differs from the ID | Utility bills or bank statements (up to 3 months old) |
Submitting the correct documents helps avoid delays during policy issuance, renewal, or claim settlement.
How to do KYC for car insurance?
Policyholders can complete KYC for car insurance through the methods permitted by IRDAI, depending on what is convenient and available at the time:
Online aadhaar-based KYC: Identity is verified through OTP authentication linked to the Aadhaar number.
Video-based KYC (VBKYC): Live video verification carried out by the insurer’s authorised representative.
Offline manual submission: Physical copies of approved identity and address documents are submitted.
Submission of form 60: Used when PAN is not available, along with a valid identity proof.
Central KYC registry: KYC details are verified through the CKYCR system, where a unique KYC ID is issued.
These methods follow IRDAI’s Anti Money Laundering (AML) Guidelines and allow insurers to verify customer details securely without unnecessary delays.
Is car insurance without KYC possible?
Car insurance cannot be issued or renewed without completing KYC, as this requirement has been made compulsory by IRDAI for motor insurance policies across India. Insurers are required to verify the identity and address of every policyholder before activating coverage or processing a renewal request. Buying or renewing car insurance without KYC is treated as non-compliant and can lead to the application being put on hold or declined altogether. These rules apply to both new policies and renewals, regardless of the insurer or policy type.
The purpose is to ensure that insurance policies are issued only to verified individuals, reduce misuse, and maintain accurate policy records. Completing KYC in advance helps avoid last-minute issues and ensures uninterrupted car insurance coverage.
What happens if I don’t complete KYC for car insurance?
Failure to submit KYC documents or providing incomplete details can result in the following issues:
Delays in policy issuance or renewal approvals.
Rejection or cancellation of the policy as per regulatory requirements
Inability to raise or process claims due to pending identity verification
Regulatory compliance concerns affect both the insurer and the policyholder
Completing KYC within the required time frame helps avoid these complications and ensures that car insurance coverage continues without interruption.
How is the car insurance premium calculated?
A car insurance premium is determined using several factors reviewed during the underwriting process. These factors help insurers assess the vehicle’s value, usage risk, and coverage requirements. The main components considered while calculating a car insurance premium are outlined below:
Premium factor | Description | Effect on premium
|
|---|---|---|
IDV (Insured Declared Value) | Current market value of the vehicle based on IRDAI depreciation rates | Higher IDV leads to a higher own damage premium |
Vehicle Age & Condition | Age affects IDV depreciation and resale value | Older vehicles usually have a lower own damage premium |
Geographic Location / Zone | Risk levels differ by city/region | Premiums are generally higher in metropolitan cities |
No Claim Bonus (NCB) | Discount for claim-free years as per IRDAI rules) | Can reduce the premium by up to 50% |
Add-on Covers | Optional covers like zero depreciation or engine protection | Increase total premium payable |
Third-Party Premium | Fixed rates prescribed by IRDAI under the 2025 tariff | Forms a mandatory part of the premium |
Goods and Services Tax (GST) | Charged at 18% on the final premium amount | Adds to the total payable premium |
If a car has an Insured Declared Value (IDV) of ₹8 lakh and the own damage rate is 3%, the own damage premium comes to ₹24,000. A fixed third-party premium of ₹3,000 is then added as per IRDAI rates. Once 18% GST is applied on the total amount, the final premium works out to approximately ₹31,860, before applying any No Claim Bonus or optional add-ons.
To get an accurate estimate based on your vehicle and coverage needs, you can enter your details into Zurich Kotak’s online premium calculator.
Obligations of insurers and policyholders regarding KYC
Per IRDAI regulations, both insurers and policyholders have defined responsibilities to ensure that KYC requirements are followed correctly and updated when necessary:
Insurers must verify the authenticity of all submitted KYC documents to prevent acceptance of fraudulent identities.
Insurance policies can not be issued in the name of an anonymous person or under false identity information.
Policyholders are responsible for updating their KYC details, including address changes, within a reasonable time and submitting proper supporting documents.
All KYC information collected is handled with care and protected in line with IRDAI guidelines and applicable Indian data privacy laws.
Meeting these obligations helps maintain transparency and ensures that insurance policies remain valid and enforceable.
Conclusion
KYC is now a compulsory step in car insurance and must be completed when buying or renewing a policy, as required by IRDAI. Policyholders need to provide valid identity and address documents such as Aadhaar, PAN, Passport, Voter ID, Driver’s License, or proof of address. KYC can be done online, through video verification, offline document submission, or by using a Central Know Your Customer Registry (CKYCR) ID. If KYC is not completed, the policy may be delayed, rejected, or not renewed. Car insurance premiums depend on factors like the vehicle’s value, age, location, claim history, add-on covers, third-party rates, and GST. Completing KYC on time helps ensure smooth policy issuance, renewal, and claim processing.
FAQs
Q1. What documents are required for KYC in car insurance?
A1. KYC for car insurance requires documents such as Aadhaar Card, PAN Card, Passport, Voter ID, Driver’s License, and valid proof of address like utility bills, as specified under IRDAI guidelines. These documents help confirm the policyholder’s identity and address.
Q2. How does IRDAI’s KYC rule affect car insurance buyers?
A2. IRDAI’s KYC rule makes identity verification compulsory before a car insurance policy is issued or renewed. Buyers must complete KYC to ensure their details are verified, regardless of the policy value or premium amount.
Q3. How is a car insurance premium calculated?
A3. A car insurance premium is based on factors such as the vehicle’s IDV, age and condition, location, No Claim Bonus eligibility, chosen add-ons, applicable third-party tariff, and GST.
Q4. What is IDV in car insurance?
A4. IDV (Insured Declared Value) is the current market value of your vehicle, which depreciates annually as per IRDAI's specified rates. It directly impacts the own damage portion of the premium.
Q5. Can I complete car insurance KYC online?
A5. Online KYC can be completed through IRDAI-approved options like Aadhaar-based OTP verification or Video KYC, allowing documents to be verified digitally and more quickly.
Q6. What happens if I don't complete KYC for my car insurance?
A6. Incomplete KYC can lead to delays in policy issuance or renewal and may also affect claim processing, as identity verification remains pending.
Q7. Are there any additional costs for KYC in car insurance?
A7. Insurers do not charge separately for KYC, since it is a regulatory requirement. In some cases, third-party verification platforms may apply a small service fee.
Q8. How to calculate a car insurance premium online?
A8. You can calculate your car insurance premium online using a car insurance premium calculator. Simply enter a few basic details such as your vehicle’s registration number, along with your mobile number and email address, and you’ll receive a quote instantly.
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