IRDAI will move private-car and two-wheeler motor insurance into a four-section structure from 15 Dec 2026, with insurers required to show coverage and premium separately. For vehicle owners, the practical change is a clearer record of what is mandatory, what is optional and which passenger or own-vehicle risks are not covered.
Key takeaways
- The framework applies to private cars and two-wheelers, including policies issued by general insurers from 15 Dec 2026.
- The four sections cover third-party liability, legal liability towards occupants or pillion riders, personal accident protection and own-damage cover.
- Third-party liability and personal accident cover for the owner-insured remain mandatory subject to applicable rules; occupant liability, extra personal accident cover and own-damage protection are optional.
- Insurers must use a customer option form and issue a Customer Information Sheet (CIS), with the premium shown separately for each section.
- An existing third-party policyholder can add occupant liability cover from the same insurer during the policy period by paying an additional premium.
What changes from 15 Dec 2026
IRDAI's circular IRDAI/CIR/MOT/10/2026, dated 2 Nov 2026, directs general insurers carrying on motor insurance business to use standard policy wording for private vehicles. The direction follows the Supreme Court's directions in National Insurance Company Ltd. vs Smt. Thungala Dhana Laxmi and others and is meant to make the protection selected by a vehicle owner easier to identify.
The regulator's format does not turn every part of a motor policy into a compulsory cover. Instead, it separates the base legal requirement from the covers that protect passengers, the owner or the vehicle itself:
| Section | Status | What it covers |
|---|---|---|
| Third-party liability | Mandatory | Legal liability for injury, death or property damage caused to another person. |
| Occupant or pillion liability | Optional | Legal liability towards covered occupants, pillion riders and eligible employees travelling in the insured vehicle. |
| Personal accident | Split by person | Owner-insured cover remains mandatory subject to applicable rules; additional cover for occupants, pillion riders and other drivers is optional. |
| Own damage | Optional | Loss of or damage to the insured car or two-wheeler, subject to the policy terms, exclusions and deductibles. |
What vehicle owners will see on the policy
At the point of sale, insurers must give customers a standard option form and a Customer Information Sheet. The form records the covers selected or declined and becomes part of the policy. The requirement applies whether the purchase is made online or offline.
The policy schedule must show the actual coverage and premium charged against each section. That breakup matters because a single total premium can hide the difference between third-party protection, passenger-related liability, personal accident cover and protection for the vehicle itself. Owners checking a renewal or an existing policy can use the car insurance policy-date and renewal guide to keep the policy period and documents aligned.
The change also creates a clearer paper trail for claims. A customer option form can show what was chosen at the time of purchase, while the CIS explains the protection in plain terms. It does not remove the need to read exclusions, deductibles, seating-capacity limits or the conditions attached to a particular cover.
Will the new format make insurance cheaper?
Not necessarily. IRDAI has standardised the structure and wording, but it has not prescribed one common price for every optional section. Insurers retain flexibility to design and price own-damage covers in line with market conditions, so the amount payable can still vary by insurer, vehicle and policy terms.
The separate premium display should make it easier to compare the cost of individual protections, but declining an optional section also means accepting the financial exposure that section would have addressed. Third-party insurance does not pay for damage to the insured vehicle, and occupant liability is not the same as personal accident protection for a passenger. These distinctions are the reason the new option form is important.
For a section-by-section explanation of the terminology, the motor insurance four-layer guide can be read alongside the policy schedule. The guide is informational; the insurer's issued documents remain the controlling record for the cover purchased.
What existing policyholders can do
IRDAI's circular allows an existing third-party policyholder to add legal liability cover for occupants or pillion riders during the policy period, subject to an additional premium. The cover must be obtained from the insurer that issued the third-party policy and becomes effective from the date and time stated in the endorsement. The existing third-party policy does not have to be cancelled for this addition.
This is different from backdating protection. An endorsement starts the additional risk from its stated effective time, so an event that happened before that time is not retrospectively covered. The final result will depend on the policy wording, exclusions and the facts of a claim.
What to watch before the implementation date
Insurers must update their policy wordings, option forms, CIS documents and policy schedules for policies issued from 15 Dec 2026. IRDAI has also directed insurers to integrate the four-layer structure with Bima Sugam by the same date so the policies are available on that digital insurance marketplace.
For owners, the useful check is whether the document shows the selected cover, the premium for that section and the relevant exclusions in one place. The framework is designed to improve clarity, but it does not replace the need to understand the protection attached to a car or two-wheeler before a policy is issued or amended.
Sources
- IRDAI, “Four Layer Structure-Motor Insurance Policy”, circular IRDAI/CIR/MOT/10/2026, 2 Nov 2026
- ETBFSI, “Explained: IRDAI's four-part motor insurance structure; what changes from December 15”, 11 Nov 2026
- Business Standard, “Irdai introduces four-layer motor insurance structure from December 15”, 4 Nov 2026
This article is for general information only and is not financial, insurance or legal advice.
