Car insurance: Survey not required for loss below ₹50,000, says Finance Ministry; check IRDAI rules here

In motor insurance, any loss less than ₹50,000 doesn’t need to be surveyed by a registered surveyor, the government told Parliament on Tuesday, December 16, citing the Master Circular on Protection of Policyholders' Interests, 2024.

Insurers are using app-based methodology and AI-driven assessment instead of the survey, the Minister of State for Finance, Pankaj Chaudhary, said in a written reply to a query in Lok Sabha.

“As per provisions of the Master Circular on Protection of Policyholders' Interests, 2024, in motor insurance, any loss that is less than ₹50,000/- need not be mandatorily surveyed by a registered surveyor. Insurers are using App-based methodology with AI-driven assessment for the same,” he said.

This was in response to these questions:

Will the Minister of Finance be pleased to state:

(a) whether the Government has taken cognisance of rising complaints regarding fraudulent practices during car-insurance claim settlement, including coercive assessment, arbitrary deductions and forced cash-loss agreements by insurers or surveyors;

(b) the steps taken by IRDAI to strengthen monitoring of motor-claim investigations, digital evidence verification and grievance redressal

IRDAI on settlement of claims and survey

In motor insurance, the Insurance Regulatory and Development Authority of India (IRDAI) has made a survey mandatory to assess the damage to a vehicle after the accident. The survey has to be done by a licensed surveyor, who verifies the loss and gives an estimate for the repair costs to ensure fair claim settlement. The surveyor acts as a crucial link between the policyholder and insurer for claims exceeding ₹50,000.

“In case of a claim under a general insurance policy, loss assessment is made by the surveyor. Any loss that is reported under a general insurance product that exceeds ₹50,000/-or more (in case of motor insurance) and ₹1 lakh or more (in case of other than motor insurance) needs to be mandatorily surveyed by a registered surveyor and loss assessor,” as per the IRDAI’s Master Circular on Protection of Policyholders' Interests, 2024.

• The surveyor should be allocated within 24 hours of reporting the claim.

• After the surveyor is allocated, the insurer shall communicate the details of the appointment of the surveyor to the insured immediately.

• The surveyor shall submit the survey report to the insurer within fifteen days of allocation, and a fine of ₹500 per day will have to be paid to the claimant if the report submission is delayed.

Steps taken by IRDAI to protect policyholders

IRDAI has taken many steps to protect policyholders, said Chaudhary in his reply.

“The sector regulator, Insurance Regulatory and Development Authority of India (IRDAI), has taken various regulatory measures for the protection of policyholders’ interests, which require insurers to adopt transparent, time-bound and fair claim-settlement processes. The Regulations form the primary legal instrument to prevent arbitrary or coercive practices during motor claim settlement,” he said.

As per the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024, insurers must:

• have board-approved claim-settlement policies
• disclose the roles, duties and appointment details of surveyors to the insured
• ensure that all claim deductions and settlements are transparent, reasonable and supported by documents

Complaints in motor segment

As per the reply, the percentage of complaints received by IRDAI in the motor segment to total complaints was 26.18% in FY 2023-24, which decreased to 24.8% in 2024-25.

Out of the total 10,156 complaints received by the Insurance Ombudsman under the motor insurance category during FY23, FY24 and FY25, as many as 9,943 were disposed of (awarded, withdrawn and non-entertainable), the minister said. The rest are under process, he added.

Penalties for surveyor misconduct

Answering these questions:

Will the Minister of Finance be pleased to state:

• whether stricter penalties for surveyor misconduct are being considered, and

• the details of actions taken against insurers found violating claim-settlement norms over the last three years?

The minister said that the IRDAI (Insurance Surveyors and Loss Assessors) Regulations, 2015, provide for the monitoring of surveyor performance by insurers, under which it is ensured that they follow the prescribed code of conduct.

“Insurers are required to examine any reported deviations, undertake necessary enquiries and report established violations to the Authority. Such cases are processed in accordance with the regulatory framework,” he said.

The IRDAI can suspend the license of a surveyor if they fail to fulfil their duties and responsibilities in a satisfactory and professional manner, violate the code of conduct or act prejudicial to the interest of the policyholders, he added.

As per the reply, the IRDAI has issued 53 cautions and advisories to various surveyors as a part of regulatory action taken on inspection observations during FY23, FY24 and FY25.