You don’t need to buy compulsory personal accident insurance cover more than once

Last week, the Insurance Regulatory and Development Authority of India (Irdai) announced the unbundling of compulsory personal accident cover from motor insurance from 1 January 2019. But this doesn’t mean that you don’t need personal accident cover. It simply means that you don’t have to compulsorily buy personal accident cover every time you take motor insurance for any new car that you buy in addition to an existing vehicle. If you already have a personal accident policy and the minimum mandated cover as part of the motor insurance of your first vehicle, you don’t have to buy it again when buying motor insurance for your second vehicle.

The third-party liability cover part of your motor insurance covers loss of life or damage to a third party and is to be taken mandatorily. The own damage cover covers damage to the insured vehicle and theft and is optional. The premium for third-party insurance is decided by Irdai each year, while that for own-damage cover is decided by individual insurance companies.

According to the India Motor Tariff, 2002, a compulsory personal accident cover has to be part of the motor insurance policy. This cover is applicable in both cases: if a person buys only a third-party policy or a comprehensive policy which has both third-party and own-damage covers. Your policy will list this as “PA cover for owner driver". An “owner-driver" is the owner of the insured vehicle having a valid driving licence, according to the India Motor Tariff.

In September, following an order from the Madras high court, Irdai increased personal accident cover to ₹ 15 lakh for all categories of vehicles, for which a premium of ₹ 750 (plus taxes) is payable. (Read more about it here: bit.ly/2US5ONL)

This personal accident cover provides compensation in case of death or permanent disabilities due to an accident involving the insured vehicle.

At present, Irdai has fixed ₹ 750 as the premium for the ₹ 15 lakh personal accident cover that is bundled with motor insurance policies. However, for the unbundled and standalone cover that will be available from 1 January, insurers will be allowed to price the standalone personal accident cover based on risk. This means that the premium of the standalone cover might be higher than ₹ 750 that has been fixed by Irdai for the same product in a bundled form.

Irdai has also said that a policyholder can continue to opt for the compulsory personal accident cover as part of the insurance policy.

Also, having this cover is mandatory by law. So if you do not have a personal accident cover of your own at present, or own only one vehicle, then going for the bundled compulsory accident cover would be beneficial.

The new rule would be helpful for those having more than one vehicle or those having their own personal accident insurance with a sum assured of ₹ 15 lakh or above, with a cover against death and total or partial permanent disability.