IRDAI (Insurance Regulatory and Development Authority of India) is the statutory regulator for all insurance in India. For motor insurance, IRDAI fixes the third-party premium tariff, sets IDV depreciation rates, mandates minimum claim settlement timelines (30 days for surveyor appointment, 7 days to pay after approval), requires cashless repair networks, and periodically revises rules on add-ons, bundled policies and digital sales. The 2025–2026 period has seen TP premium hikes of 15–20%, an expansion of usage-based insurance, and continued push for faster digital claim settlement.
IRDAI motor insurance rules at a glance
| Rule / requirement | Detail |
|---|---|
| Mandatory TP insurance | Required under Motor Vehicles Act, 1988 — no exceptions |
| TP premium setting | Fixed centrally by IRDAI; not market-negotiable |
| New vehicle TP bundling | 3-year TP for new private cars (since 2018) |
| IDV depreciation schedule | IRDAI sets standard rates by vehicle age for OD claims |
| Surveyor appointment | Insurer must appoint surveyor within 72 hours of intimation |
| Claim settlement timeline | Final settlement within 30 days of receipt of all documents |
| Personal accident cover | Mandatory ₹15 lakh PA cover for owner-driver |
| Cashless network | Insurers must maintain approved garage networks |
Who IRDAI is and what it regulates
The Insurance Regulatory and Development Authority of India (IRDAI) was established under the IRDA Act, 1999. It licences insurers, regulates premium structures, mandates policy terms, and oversees claim settlement standards for all insurance in India — including all motor insurance products.
For policyholders, IRDAI rules are the enforceable floor of protection. They do not prevent insurers from offering better terms, wider networks or additional add-ons — but they set the minimum standards every licensed insurer must meet.
Third-party premium: how IRDAI sets it
Third-party motor insurance premiums in India are not market-priced. IRDAI reviews actuarial data and sets the tariff annually, effective from April 1 each year (aligned with the financial year). The rate is fixed by engine capacity for private cars and by gross vehicle weight for commercial vehicles.
2025–2026 rates for private cars: ₹2,094 (under 1,000 cc); ₹3,416 (1,000–1,500 cc); ₹7,899 (above 1,500 cc). A further 10–25% hike is anticipated for FY 2026–27. For EVs, the tariff is based on battery capacity in kW rather than engine cc, with rates structured to incentivise EV adoption.
IDV and the IRDAI depreciation schedule
The Insured Declared Value (IDV) is the maximum payable in a total loss or theft claim and is the base for OD premium calculation. IRDAI sets the depreciation schedule applied to a vehicle's ex-showroom price to determine IDV:
| Vehicle age | Depreciation on IDV |
|---|---|
| Under 6 months | 5% |
| 6 months–1 year | 15% |
| 1–2 years | 20% |
| 2–3 years | 30% |
| 3–4 years | 40% |
| 4–5 years | 50% |
| Over 5 years | Mutually agreed between insurer and insured |
Policyholders should understand that choosing to declare a lower IDV reduces the OD premium but also reduces the maximum claim payout. Underinsuring to save premium is a false economy that crystallises in a total loss.
Claim settlement rules: what IRDAI mandates
IRDAI has set binding timelines for motor claim settlement:
- Surveyor appointment: within 72 hours of claim intimation for own-damage claims.
- Survey report submission: within 30 days of appointment (extendable for complex cases).
- Offer of settlement: within 30 days of receipt of all required documents.
- Payment after acceptance: within 7 days of the insured accepting the settlement offer.
- Interest on delayed claims: insurers must pay 2% above the bank rate on claims settled beyond mandated timelines.
Policyholders who face delayed or unjust claim settlements can escalate to IRDAI through its Bima Bharosa integrated grievance portal (bimabharosa.irdai.gov.in). All licensed insurers are required to resolve complaints through this system within mandated timelines. If the insurer does not resolve the complaint, the case can be referred to the Insurance Ombudsman — a free, independent dispute resolution service.
Key 2025–2026 IRDAI updates
- TP premium hike: 15–20% increase effective April 2025 across vehicle categories; further hike signalled for FY 2026–27.
- Usage-based insurance expansion: IRDAI has moved PAYD (pay as you drive) and PHYD (pay how you drive) products out of the regulatory sandbox and into mainstream regulatory framework, effective 2025.
- Digital policy issuance: all new motor policies must be issued digitally (via DigiLocker or insurer app) from 2025 — physical policy documents remain valid but digital issuance is now the default.
- Consent-based FASTag data sharing: IRDAI and MoRTH framework allows insurers to access FASTag toll data with policyholder consent for PAYD pricing and claim verification.
- Motor floater policies: IRDAI has permitted family-floater style policies covering all vehicles in a household under one policy — currently in pilot with select insurers.
Mandatory personal accident cover
Since January 2019, IRDAI has made it mandatory for every vehicle owner to carry a ₹15 lakh personal accident cover for the owner-driver. This cover is separate from the TP and OD components and can be purchased as a standalone annual product or bundled with a comprehensive policy. Named passengers can also be covered under PA add-ons.
Frequently asked questions
Can I file a complaint against my insurer with IRDAI?
What happens if my insurer delays settling my claim?
Does IRDAI regulate the own-damage premium?
Is it legal to drive in India without third-party insurance?
What is the personal accident cover requirement under IRDAI?
Sources & further reading
Figures, prices and policy details were current at the last-updated date above. Automotive pricing, incentives and regulations change frequently — verify time-sensitive details with the linked primary sources. Read our editorial policy and fact-checking standards.
