You do not have to take out compulsory private accident insurance more than once

It is mandatory for every vehicle to have third party liability and personal accident insurance as part of the car insurance. Because personal accident insurance is mandatory, it is bundled with the car insurance. For you, this meant that you had to take the bundled personal accident insurance home with you even if you bought a second car. Taking out the same insurance multiple times only increases the cost, and the regulator has recognized this too.

Last week, the Insurance Regulatory Authority of India (Irdai) announced the replacement of mandatory personal accident cover from motor insurance from January 1, 2019. But that doesn’t mean you don’t need personal accident cover anymore. It just means you don’t have to buy personal accident cover every time you buy motor insurance for a new car you buy in addition to an existing vehicle. If you already have personal accident cover and the minimum mandatory cover as part of your first vehicle’s motor insurance, you don’t need to buy it again when you buy motor insurance for your second vehicle.

The third party cover of your car insurance covers death or damage to third parties and is mandatory. The comprehensive cover covers damage to the insured vehicle and theft and is optional. The premium for the third party cover is set every year by Irdai, while the premium for the comprehensive cover is set by the individual insurance companies.

As per the Indian Motor Tariff 2002, a compulsory personal accident insurance must be part of the motor insurance policy. This cover applies in both cases: when a person takes out third party insurance only or comprehensive insurance which provides both third party and self-damage cover. In your policy, this will be listed as ‘Owner-Driver PA Cover’. An ‘Owner-Driver’ as per the Indian Motor Tariff is the owner of the insured vehicle who holds a valid driving license.

In September, following an order from the Madras High Court, Irdai increased the personal accident insurance to ₹ 15 Lakh for all vehicle categories for which a premium of ₹ 750 (plus taxes) are to be paid. (More here: bit.ly/2US5ONL)

This private accident insurance provides compensation in the event of death or permanent disability resulting from an accident involving the insured vehicle.

Currently, Irdai ₹ 750 as a bonus for the ₹ 15 lakh personal accident insurance, which is bundled with motor insurance policies. However, for the unbundled and standalone insurance, which will be available from January 1, insurers are allowed to price the standalone personal accident insurance on a risk-based basis. This means that the premium of the standalone insurance can be higher than ₹ 750 fixed by Irdai for the same product in bundled form.

Irdai has also stated that a policyholder will continue to have the option to purchase compulsory private accident insurance as part of his insurance policy.

In addition, this insurance cover is required by law, so if you do not currently have your own private accident insurance or only own one vehicle, taking out a bundled compulsory accident insurance policy is an advantage.

The new regulation would be helpful for those who own more than one vehicle or have their own private accident insurance with an insured sum of ₹ 15 lakh or more, with cover against death and total or partial permanent disability.