IRDAI sets four-layer motor insurance policy for cars and two-wheelers from 15 Dec
IRDAI has told general insurers to sell motor cover for private cars and two-wheelers in a four-layer structure with uniform wordings and a mandatory option form from 15 December 2026.
Key points
- IRDAI issued a circular dated 2 November 2026 to implement Supreme Court directions on a four-layer motor insurance policy for private vehicles.
- All policies for private cars and two-wheelers issued from 15 December 2026 must follow the new structure, uniform wordings and option form.
- Buyers will see separate sections and premiums for third-party, occupant liability, personal accident and own-damage cover, and get a Customer Information Sheet.
The Insurance Regulatory and Development Authority of India (IRDAI) has directed all general insurers to offer motor insurance for private cars and two-wheelers in a new four-layer structure with uniform policy wordings. The circular, dated 2 November 2026, applies to every such policy issued from 15 December 2026.
What Happened
IRDAI said the circular implements directions of the Supreme Court in Civil Appeal No. 14369/2025, National Insurance Company Ltd. vs Smt. Thungala Dhana Laxmi and others. The court directed a four-layer policy so that vehicle owners clearly know their options and can make an informed choice. IRDAI issued the wordings under Section 14(2) of the Insurance Act, 1938, based on drafts from the General Insurance Council.
The four sections are:
- Section I: liability to third parties (mandatory).
- Section II: legal liability to occupants or pillion rider, including employees of the insured (optional).
- Section III: personal accident cover, mandatory for the owner-insured and optional for occupants, pillion rider or a driver other than the owner.
- Section IV: loss of or damage to the insured vehicle (optional).
Insurers must obtain a completed option form from every customer, online or offline, and issue a Customer Information Sheet at the point of sale. The policy schedule must show the cover and the premium for each section.
What It Means
From 15 December 2026, a car or two-wheeler owner buying a policy will tick the covers they want and see what each one costs. Existing policyholders can add Section II cover during the policy period by paying an extra premium, but only from the insurer that issued their third-party policy; cover starts from the date in the endorsement. No existing third-party policy needs to be cancelled.
Insurers remain free to price own-damage cover, but may not restrict the basic cover under the structure. IRDAI has also told insurers to make these policies available on Bima Sugam from the same date.
Source: IRDAI circular
Sources & Citations
- IRDAI circular — Insurance Regulatory and Development Authority of India