Extension in insurance validity for the same number of days as the lockdown period is being sought
Bus & Car Operators Confederation of India (BOCI) representing private passenger transport operators, has approached IRDA (Insurance Regulatory and Development Authority) to seek extension of vehicle insurance validity. BOCI operators operate 17 lakh buses across segments, accounting for 30 crore passenger trips. Long story shot, that’s 80 percent of all private public transport in India.
Private operators are now seeking IRDA and government intervention for vehicle insurance validity extension. With a complete lockdown announced in late March 2020, commuting came to an immediate and indefinite stop. The measure enforced to ensure public safety by maintaining necessary physical distancing left the public transport sector vulnerable with no opportunity to work for weeks at an end, and reeling under heavy financial losses.
Operators have seen their vehicles grounded since lockdown, so, third-party damage is ruled out. As a big chunk of premium is paid towards third-party damage, operators believe insurance companies should increase validity equal to number of lockdown days.
Government of India has announced extension of validity date of motor vehicle documents up to September 30, 2020. Documents include validity of fitness, permit (all types), driving license, registration or any other concerned documents. However, vehicle insurance validity for comprehensive and third-party policy covers has not been addressed.
Under current circumstances, operators are unable to pay premiums leading to large-scale defaults on premium since operations came to a standstill. BOCI members operate about 17 lakh buses and 11 lakh cars for multiple requirements, including intercity travel, school buses, and tourist vehicles. Owners pay about Rs 1 lakh a year towards insurance premium for a bus. The amount swells to Rs 2 lakh for premium buses. A collapse of the system, and shutting down ops will have a serious ripple effect.
Prasanna Patwardhan, President, Bus & Car Operators Confederation of India (BOCI) said, “The public transport operators are on the verge of bankruptcy in the current situation. We are under pressure from multiple sides, fuel price hikes, reduced capacity due to social distancing norms, loan EMIs, taxes and insurance premiums and much more. The ongoing financial burden with no revenue in the past quarter has pushed us on the brink of collapse.
We urge Insurance Regulatory and Development Authority of India (IRDA) and the Government of India to extend vehicle insurance validity equal to number of lockdown days from the date of expiry without additional premium and no increase in annual premium for next one year. The validity extension sought, will bring much-needed relief to already stressed sector.”