Have you already purchased third-party motor insurance for your car or two-wheeler but now want protection for people travelling in your vehicle? You may not have to wait until your policy renewal to add this cover
The Insurance Regulatory and Development Authority of India (IRDAI) has clarified that existing policyholders can add legal liability cover for occupants or pillion riders during the currency of their third-party insurance policy.
Under the new provision, policyholders will have to pay an additional premium to obtain this cover. However, they must approach the same insurer that issued their existing third-party policy. They cannot approach another insurer to add this protection to their existing policy.
The additional cover will become effective from the date and time specified in the endorsement issued by the insurer.
This provision is part of IRDAI's four-layer motor insurance policy structure, which will come into effect from December 15, 2026.
What does occupant liability cover mean for car and bike owners?
Under the new motor insurance structure, legal liability to occupants or pillion riders falls under Section II. This is an optional cover that vehicle owners can purchase by paying an additional premium.
It covers the insured's legal liability towards occupants travelling in a private car or pillion riders on a two-wheeler. Employees of the insured are also included under this section.
For instance, if someone travelling in your insured car or riding pillion on your two-wheeler suffers bodily injury in an accident, this cover may become relevant.
However, do not confuse this cover with personal accident insurance. Section II covers legal liability towards occupants, while Section III covers personal accident protection.
What are the four layers of the new motor insurance policy?
IRDAI has divided motor insurance into four sections to help vehicle owners understand the different types of protection available and choose covers according to their requirements.
Here is what each section covers:
Section I - Third-party liability (mandatory): Covers the insured vehicle owner's legal liability towards third parties.
Section II - Legal liability to occupants or pillion riders (optional): Covers legal liability towards occupants travelling in private cars, pillion riders on two-wheelers and employees of the insured.
Section III - Personal accident cover: Includes mandatory personal accident cover for the owner-insured and optional personal accident cover for occupants, pillion riders and drivers other than the owner-driver.
Section IV - Own-damage cover (optional): Covers loss of or damage to the insured vehicle.
While third-party liability and personal accident cover for the owner-insured are mandatory, the other covers are optional.
This structure separates the different types of motor insurance protection, allowing customers to understand which covers they are buying and which additional protection they may need.
What other changes will car and bike owners see from December 15, 2026?
The new framework also introduces requirements to make motor insurance purchases more transparent.
Mandatory customer option form: Insurers must provide customers with an option form explaining the four-layer structure. Customers will have to tick the covers they wish to purchase, whether buying insurance online or offline. Obtaining the completed form will be mandatory, and it must form part of the policy.
Customer Information Sheet: Insurers must issue a Customer Information Sheet (CIS) at the point of sale to inform customers about the available covers.
Separate premium disclosure: The policy schedule must clearly mention the actual coverage offered and the premium charged against each section. This will help customers understand how much they are paying for individual covers.
IRDAI has directed general insurers carrying on motor insurance business, except standalone health insurers and specialised insurers, to implement the new structure with uniform policy wordings from December 15, 2026.
Insurers must also complete integration of the four-layer structure with Bima Sugam simultaneously so that these policies are available on the platform from the same date.
