NEW DELHI — The Insurance Regulatory and Development Authority of India (IRDAI) has introduced a new four-layer structure for motor insurance policies covering private cars and two-wheelers, allowing customers to choose specific covers based on their requirements, effective from December 15, 2026, IANS reported on Wednesday, November 4. The regulator said the revised framework is aimed at improving customer choice and transparency by clearly separating the different components of a motor policy.

Source: IANS

Under the new framework, motor policies will be divided into four sections — third-party liability, legal liability for occupants or pillion riders, personal accident cover and own-damage cover for the insured vehicle. Third-party liability insurance will remain mandatory, while the other covers will be optional, subject to the existing regulations on compulsory personal accident insurance for vehicle owners, IANS said. The Hindu BusinessLine, reporting the same circular on Tuesday, November 3, added that all general insurers undertaking motor insurance business must adopt uniform policy wordings for all private vehicles, including new cars and two-wheelers.

Source: The Hindu BusinessLine

Every buyer will have to fill a mandatory customer option form, ticking the covers they want either offline or online, and insurers must issue a Customer Information Sheet at the point of sale stating the actual coverage offered and the premium charged against each section, BusinessLine reported. Existing policyholders will also be allowed to add legal liability cover for occupants or pillion riders during the policy period by paying an additional premium, and insurers will keep the flexibility to design products and price own-damage covers according to market conditions, IANS said.

Source: IANS

The circular — No. IRDAI/CIR/MOT/10/2026, dated November 2, 2026 — was issued in compliance with the Supreme Court's directions in National Insurance Company Ltd versus Thungala Dhana Laxmi and Others (Civil Appeal No. 14369/2025), according to the text of the circular reproduced by TaxGuru. It directs insurers, excluding stand-alone health insurers and specialised insurers, to implement the structure, and to complete integration with the Bima Sugam platform so the four-layer products are available there from December 15, 2026.

Source: TaxGuru (IRDAI circular)

For vehicle owners, the practical change is at the billing counter: instead of one bundled premium, the policy document will show what each layer costs, and buyers who do not want optional covers such as occupant legal liability or own-damage protection will be able to decline them on the option form — while third-party cover, and the compulsory personal accident cover for the owner-insured under existing rules, cannot be dropped. Sources: IANS; The Hindu BusinessLine; IRDAI circular via TaxGuru.