Following a 2017-judgment of the Madras High Court, IRDAI, the regulatory body for insurance in India, has issued a circular making it mandatory for car insurance policies to have Rs 15 lakh personal accident cover for owner/driver. Till now, the mandatory personal accident cover was of only Rs 2 lakh.
Madras HC had ordered in October 2017 that the IRDA should hike the personal accident cover to the owner /driver to a minimum of Rs 15 lakh “to add to some succour or solace to victims of road accident, who are owners of vehicles, who may sustain bodily injury or death”.
“The cover is provided to the owner-driver whilst driving the vehicle — including mounting into/dismounting from or travelling in the insured vehicle as a co-driver,” IRDAI said in a circular.
How will it impact you and your annual car insurance premium? Let’s find out.
Increase in premium: Hiking the personal accident cover to Rs 15 lakh means that it will increase the car insurance premium by about Rs 750. Do note the previous cover of Rs 2 lakh was being offered for Rs 100. The premium for all classes of vehicles for this cover has been fixed at Rs 750 per annum for an annual policy. This rate will be valid until further notice. An insured person wanting a cover more than Rs 15 lakh can buy by paying a higher premium. A few non-life insurers have for long been offering add-on covers by charging an additional premium.
Owner/driver concept: Do note that the owner of the insured vehicle holding a valid driving licence is termed as owner-driver. The cover is provided to the owner-driver whilst driving the vehicle, including mounting into or dismounting from or travelling in the insured vehicle as a co-driver. In case of an accident, the policy covers the owner-driver, even if the owner is not the one driving and is sitting in the passenger seat
Third party covers: Third-party motor insurance is mandatory under the Motor Vehicles Act. In the case of road accidents and fatalities, there is no legal time limit on insurance claims. The premium for third party liability cover is limited and is fixed by the regulator every year. The provision of compulsory personal accident cover for owner-drivers was introduced in 2002. Then, this was charged compulsory for vehicles registered in the name of an individual.
Good step: You may not be happy that you have to shell out more in premium. But this move of enhancing the personal accident cover sum insured to Rs 15 lakh is a step in the right direction. An appropriate personal accident cover is a must for anybody travelling in cars. There is high-risk exposure to people driving bikes and cars. Personal accident covers are very cheap compared to mediclaim policies. Such a personal accident cover can provide much needed financial support to the policyholder and family members if the policyholder is disabled or succumbs to injury due to an accident.
Better solution: The personal accident cover bundled in the motor cover is not the best solution. This is because it is only operative whilst you are alighting on to the vehicle, or off the vehicle or whilst in the vehicle. Simply put, this is not a 24-hour cover. So, you should take a separate personal accident cover to cover for all kinds of accidents and not just car accidents.