New motor insurance rules December 15: What’s changed? 5 things car & bike owners must check before renewal

Motor insurance renewals could become more detailed for car and two-wheeler owners from December 15, 2026, when the Insurance Regulatory and Development Authority of India (IRDAI) introduces a new four-layer structure for private vehicle insurance policies.

The revised framework will separate motor insurance into four components: third-party liability, legal liability towards occupants or pillion riders, personal accident cover and own-damage protection.

For vehicle owners, the changes mean that renewing a policy will require more than comparing premiums. They will need to assess who regularly travels in their vehicle, whether passengers have adequate protection and whether they can afford to bear repair costs if their vehicle is damaged.

Insurers will also have to disclose premiums for individual components, provide a Customer Information Sheet (CIS) and obtain a Customer Option Form recording the covers selected by the policyholder.

Here are five things car and bike owners should check before renewing their motor insurance policies.

1. Check which motor insurance covers are mandatory and optional

The first thing policyholders should understand is that all four components do not carry the same requirements.

Third-party liability insurance will remain mandatory. It covers the vehicle owner’s legal liability for injury, death or property damage caused to another person in an accident. Personal accident cover for the owner-insured will also remain mandatory, subject to applicable rules.

However, legal liability towards occupants or pillion riders, additional personal accident cover for passengers and own-damage protection will be optional.

“Customers should consider their vehicle’s usage, the usual occupants and the individual protection required for each of them, not just the premium before choosing the covers most relevant to them,” said Shanai Ghosh, MD and CEO of Zuno General Insurance.

Vehicle owners should not assume that purchasing mandatory third-party insurance automatically protects their passengers or covers damage to their own vehicle.

2. Check whether passengers and pillion riders are protected

One of the important additions under the new framework is the option to purchase legal liability cover for occupants in cars and pillion riders on two-wheelers.

This cover protects the vehicle owner against legal liability for death or bodily injury to eligible occupants, including employees travelling in the insured vehicle. However, there are important exclusions.

According to Vaibhav Goyal, MD and CEO of Navi General Insurance, the cover excludes the owner, the insured and their immediate family members, including parents, spouse and children. The number of occupants covered cannot exceed the vehicle’s registered seating capacity.

Vehicle owners who frequently travel with friends, colleagues or other passengers should examine whether this additional protection is relevant to them.

Bikash Choudhary, CEO of FatakSecure, said customers should also understand the distinction between occupant liability and personal accident insurance. While occupant liability protects the vehicle owner against legal liability towards eligible passengers, personal accident insurance provides a specified financial benefit to an insured individual in the event of covered accidental injury, disability or death.

Having one cover does not automatically mean that the other is included.

3. Evaluate whether you need additional personal accident cover

Personal accident cover for the owner-insured will remain mandatory, but customers can separately opt for additional personal accident protection for occupants, pillion riders and drivers other than the owner-driver.

This is particularly relevant for vehicle owners who regularly travel with family members or other passengers.

Before purchasing this cover, policyholders should check who is eligible, the compensation available and the circumstances under which the insurer will pay a claim.

Ghosh said customers should assess the protection required by the people who regularly travel in their vehicles rather than selecting covers solely on the basis of their additional premium.

The objective should be to identify financial gaps in the existing policy instead of assuming that every passenger is adequately insured.

4. Reassess own-damage protection, IDV and deductibles

Own-damage insurance protects the insured vehicle against specified losses, including damage caused by accidents and theft, subject to policy terms. However, this protection will remain optional under the revised framework.

Choudhary said vehicle owners should consider the vehicle’s current market value, age, usage, potential repair costs and their ability to absorb an unexpected financial loss before deciding whether to purchase own-damage protection.

Two factors deserve particular attention: the Insured Declared Value (IDV) and the deductible.

IDV represents the insurer’s declared value of the vehicle and generally forms the basis for calculating compensation in the event of total loss or theft. A deductible, meanwhile, is the portion of an admissible claim that the policyholder must pay.

“Don’t choose or reject a cover just because it is optional. Understand the risk it protects you against, the financial exposure you would face without it, and the cost of that protection. The cheapest policy isn’t necessarily the most suitable one,” Choudhary said.

5. Compare the premium breakdown and read the policy documents

Another important change is the requirement for insurers to disclose the premium charged against each component separately.

Instead of looking only at the overall renewal premium, customers will be able to examine how much they are paying for third-party liability, personal accident protection, occupant liability and own-damage insurance.

Insurers will also have to provide a mandatory Customer Information Sheet explaining the available coverage and obtain a completed Customer Option Form recording the covers selected by the policyholder.

Goyal said the option form will help customers make informed choices about the protection they purchase, while the CIS will provide greater clarity about the available covers.

Existing policyholders will also be able to add legal liability cover for occupants or pillion riders during the policy period by paying an additional premium, without cancelling their existing third-party insurance policy. This additional cover will have to be purchased from the insurer that issued the existing third-party policy.

The revised framework will come into force on December 15, 2026, with the new policies also becoming available on Bima Sugam from the same date.

For vehicle owners, the key takeaway is to look beyond the headline renewal premium. Understanding exclusions, passenger protection, own-damage coverage and the cost of individual covers can help ensure that a cheaper policy does not leave them exposed to a substantial financial loss after an accident.