IRDAI mandates four-layer motor insurance structure from December 15

All general insurers undertaking motor insurance business would have to adopt uniform policy wordings, along with a mandatory customer option form and Customer Information Sheet (CIS), for all private vehicles, including new cars and two-wheelers | Photo Credit: RIDOFRANZ

In line with the directions of the Supreme Court, the Insurance Regulatory and Development Authority of India (IRDAI) has directed general insurers to implement a four-layer motor insurance policy structure for private cars and two-wheelers from December 15, 2026

This will allow vehicle owners to choose from different insurance covers and make informed decisions on the protection they require, the regularor said.

Under the new framework, motor insurance policies will have four distinct sections covering third-party liability, legal liability to occupants or pillion riders, personal accident cover and loss of or damage to the insured vehicle (own damage), as per the circular released on Tuesday. 

While third-party liability cover will remain mandatory, the other covers will be optional, subject to the applicable provisions governing mandatory personal accident insurance for owner-insured persons.

All general insurers undertaking motor insurance business would have to adopt uniform policy wordings, along with a mandatory customer option form and Customer Information Sheet (CIS), for all private vehicles, including new cars and two-wheelers. 

The circular was issued in accordance with the Supreme Court’s order in the case of National Insurance Company Ltd vs Thungala Dhana Laxmi & Others, the IRDAI said.

MANDATORY

Insurers will have to obtain a duly completed option form from every customer purchasing a policy. Customers will be required to indicate their choice of covers by ticking the relevant options, either offline or online. Issuance of the CIS at the point of sale will also be mandatory, clearly stating the actual coverage offered and the premium charged against each section, ensuring transparency in the components of the motor insurance policy. 

There will be flexibility to existing policyholders to add legal liability cover for occupants or pillion riders during the currency of their policies by paying an additional premium.

The insurers can continue to innovate their coverage and determine the pricing of own-damage covers in line with market forces. 

“The insurers are directed to ensure the integration of the four-layer motor insurance policy structure with Bima Sugam is completed simultaneously so that their policies are available from Bima Sugam from the same date (December 15, 2026),’’ the circular said.

Published on November 3, 2026