IRDAI rules and regulations for car insurance in India

A lorry clipped the rear of Ravi Chandran’s sedan in Coimbatore. He claimed on his own policy for the repair three weeks ago. The assessor came and went, and the garage still has his car. He wants to know what his insurer must do, and by when.

Most people meet these rules at exactly that moment. The regulations sit quietly behind a policy until a claim or a renewal makes them matter. Knowing which ones carry a deadline turns a wait into a question you can ask.

What are the latest IRDAI rules for car insurance in India in 2026?

Four instruments govern retail car insurance today. The Motor Vehicles Act, 1988 makes third-party cover compulsory. IRDAI’s master circulars of June and September 2024 set claim handling and policyholder protection. The IRDAI (Insurance Products) Regulations, 2024 govern how products are designed and filed.

The most recent substantive change for a car owner dates from 2024. IRDAI issued its Master Circular on General Insurance Business on 11 June 2024. Its reference is IRDAI/NL/MSTCIR/MISC/90/06/2024. The Master Circular on Protection of Policyholders’ Interests followed on 5 September 2024, numbered IRDAI/PP&GR/CIR/MISC/117/9/2024.

Those two carry the claim deadlines that matter in practice. The IRDAI (Insurance Products) Regulations, 2024 took effect on 1 April 2024. They gave insurers more room to design and file general insurance products. IRDAI separately withdrew its old general insurance tariffs in April 2024.

One point gets misread often. Withdrawing those tariffs did not hand insurers freedom over statutory third-party base rates. Those still follow a separate government framework.

Which car insurance cover do IRDAI rules make compulsory?

Third-party liability cover is compulsory for every car under the Motor Vehicles Act, 1988. Compulsory Personal Accident cover for the owner-driver is required at ₹15 lakh. Comprehensive cover is optional. Driving without valid third-party cover is an offence under Section 196 of the Act.

The limits work differently for people and for property, and the gap is wide. Cover for death or bodily injury to a third party carries no ceiling in the policy. It pays whatever the Motor Vehicles Act requires. Third-party property damage is capped.

Third-party liability limits under a private car policy

That ₹6,000 row surprises people. The proposal form carries a tick box restricting property damage cover to the statutory ₹6,000. Taking it lowers the premium. Very few owners should, because one collision with a new car costs many times that.

Compulsory Personal Accident cover is charged under tariff provision GR 36A. IRDAI set the sum insured at ₹15 lakh and the premium at ₹750 a year. The circular is IRDAI/NL/CIR/MOTP/158/09/2018, dated 20 September 2018. With 18% GST that comes to ₹885. A second circular of 9 October 2018 allows the cover for one year alongside a long-term policy.

Three grounds let you decline it. The common one is already holding a personal accident policy of at least ₹15 lakh. The others are a vehicle not owned by an individual, and an owner-driver with no effective driving licence. Where you own more than one vehicle, the cover can be granted on any one of them.

Passengers sit outside all of this and need cover taken for them. The policy offers personal accident cover for named passengers and for unnamed ones. These are standard endorsements, numbered IMT.15 and IMT.16. The most you can insure is ₹2,00,000 a person, in multiples of ₹10,000. Paid drivers, cleaners and conductors come under IMT.17, and each of these costs extra.

Who sets third-party car insurance premium rates under IRDAI rules?

The Ministry of Road Transport and Highways notifies third-party base premium rates, in consultation with IRDAI. The governing instrument is the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022. It was notified on 25 May 2022 and took effect on 1 June 2022. Many pages still credit IRDAI alone.

This matters because it tells you which rates you can argue about. Your third-party premium is fixed by notification and varies with engine capacity. No insurer can discount it or load it, so comparing quotes on that component is wasted effort.

Own damage is the part of the policy that pays to repair your own car. That side behaves the opposite way. It moves with your insured value, your car’s age and its condition. Where you keep it, your claim history and your chosen add-ons all count too. That is the part worth shopping.

The 2022 rates were the last ones implemented as at mid-2026. The industry has been seeking a revision since, so treat any rate you read online as indicative. The figure that binds you is the one printed on your own schedule.

What do IRDAI rules say about 3-year cover on a new car?

A newly bought private car needs three years of third-party cover at the outset. Own-damage cover can be bought for one year at a time and renewed separately. A three-year comprehensive package is not required. IRDAI withdrew the requirement to offer long-term package policies from 1 August 2020.

The practical shape of this trips up new buyers at the dealership. You leave with three years of third-party protection, and an own-damage policy that may expire in twelve months. Letting that side lapse leaves you legally compliant and financially exposed.

So diary the own-damage expiry separately, because they are two different dates on one car. Zurich Kotak files the three-year product as Liability Only (Private Car) three years. Its unique identification number, or UIN, is IRDAN152RP0006V03201819. For two-wheelers the arrangement runs to five years.

What claim settlement timelines do IRDAI rules set for car insurance?

Under the 2024 master circulars the assessor’s report is due within 15 days of the assessor being appointed. The insurer must decide the claim within 7 days of receiving that report. Where the report runs late, a charge of ₹500 a day can apply.

Those two deadlines are the ones to quote back to an insurer. The trigger for the second is the assessor’s report arriving, and your accident date does not start it. So nobody is promised a settlement within seven days of a crash. That misreading is worth avoiding.

Claim handling deadlines under the 2024 master circulars

The ₹500 a day does not attach to every late report. The circular lists the cases where it applies. So check which case fits your claim before you count on it.

Ravi’s useful question is therefore narrow. He needs the date the assessor was appointed, and the date the report reached his insurer. Those two dates tell him whether anybody is late, and which deadline has run.

The same framework brought in the Customer Information Sheet. Your insurer must give you a short document covering the policy in plain terms. It sets out what is covered, what is excluded, how to claim and where to complain. Read it before the policy wording, because it is written to be read.

These circulars do not settle everything. Cashless repair still depends on your insurer’s garage arrangements and your policy terms. No rule guarantees it everywhere. The one-hour cashless authorisation that applies in health insurance does not carry across to motor.

How do IRDAI rules set your car’s IDV and depreciation?

Your Insured Declared Value is the manufacturer’s listed price less a fixed percentage for the car’s age. The published scale runs from 5% at six months to 50% at five years. Past five years the figure is settled by an understanding between the insurer and you. The same applies to discontinued models.

Depreciation applied to arrive at your insured value

Here is the part almost every page gets wrong. This scale applies only where the car is written off or stolen. It never touches a repair bill.

A repair claim uses a separate scale on each replaced part. That one runs by material and by age. It reaches 40% at five to ten years and 50% past ten. Plastics, tyres, batteries and airbags are cut by 50% at any age. Glass carries no cut at all.

Reading the insured-value scale as your repair deduction therefore overstates the loss. The gap between the two is wide on an older car. Past five years the scale runs out and the number becomes a conversation. A higher insured value raises your payout on theft or a write-off, and raises your premium too.

What do IRDAI rules say about a total loss car insurance claim?

Your car becomes a constructive total loss once recovery and repair costs pass 75% of its insured value. The claim is then settled on the insured value less the value of the wreck. You can agree to keep the wreck, which reduces the settlement by what it is worth.

That 75% line is worth working out before you need it, so multiply your insured value by 0.75. The answer is the repair bill above which your car stops being repaired. On a car insured for ₹4,00,000 the line sits at ₹3,00,000.

The line matters most to anyone paying for a zero depreciation add-on. Above it nothing gets replaced, so the add-on has nothing to act on. A car with a low insured value crosses that line on a smaller crash than its owner expects.

What do IRDAI rules say about your car insurance No Claim Bonus?

The No Claim Bonus is a discount on your own-damage premium for every claim-free year. It starts at 20% after one year and reaches 50% after five. It survives a renewal gap of up to 90 days. The bonus belongs to you rather than to the car.

No Claim Bonus for a standard annual private car policy

Two different transfers get muddled here, and the difference costs money. Moving your bonus to a new insurer is normal. So is moving it to a car you have just bought. You carry it with a certificate from the previous insurer. Selling the car is different, because the buyer starts at zero and your bonus stays with you.

Let the renewal slip past 90 days and the bonus drops to zero. An inspection may also be required before cover resumes. A 50% discount rebuilt from scratch takes five claim-free years.

These slabs apply to a standard annual policy. A long-term policy carries its own filed schedule, so check the one printed on yours. Assuming the annual grid on a multi-year policy will give you the wrong number.

Which car insurance deductibles do IRDAI rules fix?

A compulsory deductible applies to every own-damage claim and you pay it yourself. Motor tariff provision GR.40 sets it by engine capacity. The figure is ₹1,000 for a private car up to 1,500 cc and ₹2,000 above that. Your schedule prints the one that applies to your car.

The policy wording itself leaves the amount blank, and the blank is deliberate. IMT.22 carries a footnote to insert the amount appropriate to the class of vehicle. It points to GR.40 of the tariff for that figure. So the tariff supplies the number and your schedule records it.

A voluntary deductible sits on top if you choose one. It cuts your premium in return for you paying more on every claim. The discount is capped in rupees while the deductible applies to each claim. So the math rarely favours a large one.

What do IRDAI rules allow on Pay As You Drive car insurance?

IRDAI permitted Pay As You Drive and Pay How You Drive in July 2022. The circular is IRDAI/NL/CIR/Motor/136/07/2022, dated 5 July 2022. Both sit within the own-damage side of a motor policy. Pay As You Drive prices on distance travelled and Pay How You Drive on driving behaviour.

The 2022 circular opened the door and the 2024 product regulations widened it. Insurers now have more freedom to design and file these options. What each insurer offers still depends on the product it has registered with IRDAI.

Zurich Kotak files Pay As You Drive under its Car Secure policy, with the UIN IRDAN152RP0006V04201516/A0182V01202526. You pick a kilometre plan at the start of the policy period. Top-up kilometres can be bought if you exceed it.

One condition deserves a second reading. An own-damage claim is valid while the car sits within the unused kilometre limit of your plan. The cover rewards low mileage and punishes an under-declared plan. Anyone whose driving is seasonal should count a full year honestly before choosing a band.

IRDAI rules for car insurance: what to check on your own policy

Your schedule carries the figures the regulations decide. Those are the third-party limits, the compulsory deductible, the insured value and the No Claim Bonus percentage. Reading those four tells you most of what the rules do for you.

Ravi’s wait came down to two dates he had never asked for. He needed the date the assessor was appointed and the date the report reached the insurer. With both in hand he could see which deadline was running. He called the claims line with the dates and got a specific answer.

Start with your own documents before anything else. The Customer Information Sheet summarises cover, exclusions and the claim route in plain terms. The schedule carries your insured value and your deductible. It also carries your bonus and the claim count on any add-on you hold.

Then diary the dates that cost money. Those are your renewal date and the 90-day window protecting your bonus. On a new car, add the separate expiry of the own-damage cover. Zurich Kotak General Insurance offers private car cover under its Car Secure policy. A quote confirms what applies to your own car.

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FAQs

What are the latest IRDAI rules for car insurance in India in 2026?

The framework rests on the Motor Vehicles Act, 1988 for compulsory third-party cover. IRDAI’s two master circulars of 11 June 2024 and 5 September 2024 govern claim handling and policyholder protection. The IRDAI (Insurance Products) Regulations, 2024 took effect on 1 April 2024. They cover how products are designed and filed. The most recent substantive change for a car owner came in 2024.

Is comprehensive car insurance compulsory under IRDAI rules?

No. Only third-party liability cover is compulsory, under the Motor Vehicles Act, 1988. Compulsory Personal Accident cover for the owner-driver is also required, at a sum insured of ₹15 lakh. Comprehensive cover adds own-damage protection and remains a choice.

Who fixes third-party car insurance premium rates?

The Ministry of Road Transport and Highways notifies them, in consultation with IRDAI. The instrument is the Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022. It was notified on 25 May 2022 and took effect on 1 June 2022. Pages crediting IRDAI alone describe the position before 2022.

How much third-party property damage does a car policy cover?

A private car policy covers third-party property damage up to ₹7.5 lakh. The statutory minimum is ₹6,000. The proposal form carries a tick box letting you restrict cover to that figure for a lower premium. Cover for death or bodily injury to a third party has no ceiling written into the policy.

How long does an insurer have to settle a car insurance claim?

Under the 2024 master circulars the assessor’s report is due within 15 days of the assessor being appointed. The insurer must then decide the claim within 7 days of receiving that report. The seven days run from receipt of the report, and your accident date does not start that clock.

Does a new car need three years of insurance?

A newly bought private car needs three years of third-party cover at the outset. Own-damage cover can be bought annually and renewed separately, and a three-year comprehensive package is not required. IRDAI withdrew the requirement to offer long-term package policies from 1 August 2020.

What is the IRDAI depreciation table used for?

It sets your Insured Declared Value, running from 5% at six months to 50% at five years. That scale applies only where the car is written off or stolen. A repair claim uses a separate scale on each replaced part. That one runs by material and reaches 40% at five to ten years.

When is a car declared a total loss?

Once recovery and repair costs pass 75% of the insured value. The claim is then settled on the insured value less the value of the wreck. You can agree to keep the wreck, which reduces the settlement by what it is worth.

Can I keep my No Claim Bonus if I renew late?

Yes, within 90 days of expiry. Past 90 days the bonus drops to zero and an inspection may be required before cover resumes. The bonus follows you and not the car. So it stays with you when you sell, and the buyer starts at zero.

Are passengers covered under a car insurance policy?

Not by the compulsory covers. Third-party cover protects people outside your car, and Compulsory Personal Accident cover protects the owner-driver. Passengers need personal accident cover taken for them, under IMT.15 for named passengers or IMT.16 for unnamed ones. The maximum sum insured is ₹2,00,000 per person, in multiples of ₹10,000. Paid drivers, cleaners and conductors come under IMT.17.

How much GST applies to a car insurance premium?

GST on a car insurance premium is 18%, on third-party, own-damage and comprehensive cover alike. The exemption introduced in September 2025 applies to individual life and health insurance. Motor insurance was not included in it.

Who pays the compulsory deductible on a claim?

You do, on every own-damage claim. Motor tariff provision GR.40 sets it at ₹1,000 for a private car up to 1,500 cc. Above 1,500 cc the figure is ₹2,000. The policy wording leaves the amount blank and your schedule prints the one that applies.

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