Latest Changes in Compulsory Personal Accident Cover

IRDAI (The Insurance Regulatory and Development Authority of India) on September 20, 2018, announced new rules that will be applicable while purchasing and renewing two-wheeler & car insurance policies. The changes in the policy were made because it was noticed that the existing CPA (Compulsory Personal Accident) cover was very low and insufficient. The changes have been made to the component marked in Red. In India, it is mandatory for all the vehicle owners to buy a third party liability insurance. This third party liability insurance has two components:

• Third Party - This component provides coverage against the loss or damage done to the third parties (people and property) due to an accident involving your insured vehicle.
• CPA Cover for Owner-Driver - This component provides coverage in case of death or permanent disability of the owner-driver, i.e. you due to an accident either while driving or riding your insured vehicle.

What Is a Compulsory Personal Accident (CPA) Cover?

A CPA cover is a mandatory insurance component for the owner-driver, included in both third-party and comprehensive car insurance plans. It can also be added to an existing policy as an extension.

Key Features of CPA Cover

1. Provides monetary compensation of up to ?15 lakh for bodily injuries, disabilities, or death resulting from an accident.
2. Eligibility requires the policyholder to have a valid driving license.

This cover ensures financial support for medical expenses and loss of income due to accident-related injuries, making it an essential safety net for car owners.

Is It Mandatory to Have a Personal Accident Cover?

Initially, under the Motor Vehicles Act, 1988, only third-party car insurance was mandatory. However, with the rise in car ownership in India, there has been a significant increase in claims for bodily injuries, particularly involving owner-drivers. To address this gap, Personal Accident (PA) Cover was introduced as a mandatory add-on with car insurance policies. It ensures compensation for owner-drivers in case of injuries sustained during accidents.

Updates Under the Motor Vehicles Amendment Act, 2019

The Motor Vehicles Amendment Act, 2019, revised the rule on mandatory Personal Accident Cover with the following exceptions:

1. Existing Accident Insurance

If the owner-driver already has a standalone personal accident policy with a coverage amount of up to ?15 lakh, they are not required to purchase an additional PA cover with a new car insurance policy.

2. Coverage with Another Vehicle

If the owner-driver already has a personal accident cover linked to another vehicle's insurance policy, they are exempt from buying a new PA cover for subsequent vehicles.

Changes in third party liability insurance

Following are the changes in the third party liability insurance:

• The sum insured (SI) for TP cover has been increased to INR 15 lakhs for all the vehicles. Earlier, the SI for two-wheelers was INR 1 lakh and for cars was INR 2 lakhs.
• The TP component of the third party liability insurance for brand new  policies has to be mandatorily purchased for 5 years. While the PA cover for owner-driver can be purchased for either 1 or more years, with the maximum limit of 5 years.
• The TP component of the third party liability insurance for brand new bike insurance policies has to be mandatorily purchased for 3 years. While the PA cover for owner-driver can be purchased for either 1 or more years, with the maximum limit of 3 years.
• Owing to the increase in Sum Insured, the premium amount for PA cover for owner-driver for 1 year has been fixed at INR 331 excluding GST. Earlier the premium amount was INR 50 for two-wheelers and INR 100 for cars.
• The PA cover cannot be offered to the vehicles which are owned by any company or organization. Thus, the vehicles owned by the companies do not have to pay the additional premium for PA cover.
• A person owning more than 1 vehicle needs to pay the premium amount for PA cover for only one vehicle. This premium amount can be used for providing compensation in case any of the insured vehicles owned by the owner-driver suffers an accident causing death or permanent disability of the owner-driver.

These changes have been rolled out for all the motor insurance  policies (new purchase or renewal process). The new regulations are still settling in and the insurance companies are complying with these changes to provide the best motor insurance plans to their esteemed customers. Please visit our website or reach out to us via our Toll-Free number if you have any queries regarding the changes made in the Personal Accident Cover. We will keep updating this write-up to include all the latest changes made in the motor insurance policies. Requesting you to keep watching this space for more details.