Big Alert for Car and Bike Owners! Your Personal Accident Insurance Cover Will Change from January 1
Come January 1, 2019, and getting a Personal Accident Cover will not remain the same for vehicle owners. Here's what will change!
New Guidelines by IRDAI
As per the guidelines of the Insurance Regulatory and Development Authority (IRDAI) issued in September, insurance companies were asked to increase the sum insured of the ‘Compulsory Personal Accident (CPA) cover for owner-driver’ component in a motor policy (for both cars & two-wheelers) to Rs 15 lakh, amounting to a fixed premium of Rs 750 per annum.
A registered owner of an insured vehicle is known as the ‘Owner-Driver’ in a motor policy and is eligible for a CPA component if he is carrying a valid driving license. As per this new directive, all motor policies must include personal accident protection that covers the owner-driver for Rs 15 lakh in case of death due to an accident while driving. The Capital Sum Insured (CSI) under this section for motorized two-wheelers and private cars/commercial vehicles was increased from the previous amounts of Rs 1 lakh and Rs 2 lakh, respectively.
Option for One-Year or Long-Term CPA
Through a circular issued in October, IRDAI clarified that while buying insurance for a brand new car or two-wheeler, it is completely the choice of the owner-driver to opt for either a one-year compulsory personal accident cover or long-term CPA. This is because while buying a policy for a new vehicle, it is now mandatory to buy at least a 3-year liability or TP policy for cars and 5-year liability/TP policy for two-wheelers. Insurers are also required to ensure that the voluntary option is available for customers to opt for one-year CPA or multi-year CPA.
Unbundling the CPA Component
After receiving feedback about customers who already have a standalone personal accident cover or own more than one vehicle, IRDAI decided to unbundle the CPA component from motor policies. Effective Jan 1, 2019, customers may buy the product either with their motor policy or separately from any insurer as a general personal accident product. The same personal accident cover will be valid for any number of vehicles owned by an owner-driver.
In other words, the compulsory PA cover for the owner-driver component under motor insurance will now be optional. If a person already has a separate standalone PA cover of Rs 15 lakh or more, there is no need to purchase the compulsory PA cover as part of motor insurance.
Pricing and Coverage
Effective 1st January 2019, insurers are allowed to price the product according to their individual pricing methods. IRDAI has stated that if the pricing approach is not in line with actuarial principles, the authority may issue required directions.
The insurance coverage under the stand-alone CPA will:
- Extend to all vehicles under the same owner name
- Be valid for one year
- Include coverage for Death and Permanent Disability (Total and Partial)
As regular Personal Accident (PA) cover also includes cover against motor accidents, there is no need for customers to buy a separate CPA cover if they already have one.