Madras High Court puts its mandatory bumper to bumper insurance order in abeyance
Last week the Madras High Court had ruled that from September 1, "bumper-to-bumper" insurance should be mandatory whenever a new vehicle is sold.
September 01, 2021 / 09:34 PM IST
The Madras High Court has kept its order on mandatory bumper to bumper cover insurance in abeyance till September 13.
A source familiar to the matter said, “As per inputs submitted by General Insurance Council (GIC), the Madras HC has posted the case for further hearing on September 13 at 4:00 pm for all interested parties, till then the high court has kept the order in abeyance.”
The General Insurance Council had approached the court to make GIC and the insurance regulator (IRDAI) party to the appeal and be heard.
The GIC has sought 90 days from the court for the implementation of the court order and launch new products as insurers cannot announce new products without IRDAI’s approval.
The matter will be heard next on September 13 afternoon as the court acknowledged the response of the council and government.
On August 26, the Madras HC had issued orders to make bumper to bumper insurance mandatory including the driver, passengers and the owner of the vehicle should be provided cover for five years.
The General Insurance industry’s concerns were on the interpretation of the order as this order would have had a direct bearing on the motor premiums. Currently, there is not a single product which covers bumper to bumper insurance which includes cover of all passengers and own damage. Currently, Third Party insurance is mandatory by law.
A senior official from a private sector insurance company said, “The number of uninsured two-wheeler is close to 70% and it is mandatory to have insurance at any given point of time. The under-penetration can be solved by making it mandatory. If willingly the law is not complied then somebody is going to step into place.”
He added, that is why these kind of judgments come up to increase protection and create a safety net.
The official said a clear interpretation is needed if the premium has to be paid upfront as this would impact the prices at the time of sale and whether the mandatory bumper-to-bumper cover would include own damage.
Also Read: Motor insurance premiums may rise with mandatory bumper-to-bumper cover, say experts
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