New insurance rule to raise on-road price of cars, two-wheelers, hit sales

A longer tenure and upfront payment of the premium would save buyers the trouble of annual renewals but would proportionately raise the initial outgo on new vehicles, pushing up the on-road prices

The new motor insurance regulations to take effect from Saturday would, fear officials at automobile companies, impel those wishing to buy cars or two-wheelers to postpone purchasing.

Car dealers have been flooded with calls from buyers who had booked new vehicles in the past fortnight. The new regulation mandates buyers of cars and two-wheelers to purchase upfront insurance cover for at least three and five years, respectively. On August 20, the Supreme Court directed insurers to offer long-term third-party covers. Insurance is mandatory for all road-worthy vehicles in India but owners tend to skip renewing the policies after these lapse.