IRDAI Introduces Easy Policy Cancellation and Refund Flexibility for Policyholders

Policyholders can now cancel their insurance policies at any time during the term and receive a refund for the remaining policy period.

Reason to provide for cancellation

No need to provide any reason for cancellation if the policyholders want to cancel the policy.

Refund of Proportionate Premiums

Insurers must refund the proportionate premium for the unexpired policy period if the policy is canceled and no claim has been made during the policy period.

For policies longer than one year, refunds should be given for policy years where risk coverage has not started.

No Rejection Due to Lack of Documents

Claims should not be rejected due to lack of documents. All the required documents should be collected at the underwriting stage. Customers should only submit documents directly related to claim settlement.

Restrictions on Cancelling Compulsory Insurance

As per IRDAI, Statutory Motor Third Party Liability insurance or other compulsory insurance cannot be canceled except in cases of double insurance or total loss.

Customer Information Sheet (CIS)

Every retail customer should receive a CIS with every policy. The CIS should explain basic features of the policy, including coverage, add-ons, exclusions, and claim procedures.

New Motor Insurance Options for Greater Flexibility

Motor insurance customers should have options like Pay as you Drive, Pay as you Go, and comprehensive coverage that must includes depreciation coverage.

The vehicle's insured declared value (IDV) is the sum insured, fixed at the start of each policy period. Losses exceeding Rs 50,000 for motor insurance and Rs 1 lakh for other insurances must be surveyed by a registered surveyor and loss assessor.

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