Owners of auto insurance get relief

BENGALURU: IRDAI on Wednesday relaxed an earlier directive making it mandatory for owners of cars and two-wheelers to buy

personal accident cover

for themselves as part of their vehicle’s insurance. Now instead of a ‘bundled’ personal accident cover, vehicle owners can buy

insurance

separately, which can work with any vehicle that s/he owns.


The regulator revised its norms after feedback that many owner-drivers already had existing personal accident covers. Also, several owner-drivers have more than one vehicle.

In September, the regulator had made it mandatory for vehicle owners (both motorcycles and cars) to buy a personal accident cover of Rs 15 lakh for a yearly premium of Rs 750, when they buy motor insurance.

This was an increase from the earlier mandated cover of Rs 1 lakh for bikes and Rs 2 lakh for private and commercial cars. While this was mandatory, policyholders had the option of buying motor insurance and personal accident policies with a higher sum insured.

IRDAI’s September directive came after the Madras high court asked the regulator to hike the personal accident cover from the existing Rs 1 lakh to not less than Rs 15 lakh.

This was done to provide for families of accident victims, particularly two-wheeler riders who are often under-insured. Coming on the back of a directive forcing vehicle buyers to purchase long-term covers, the order to bundle in personal accident had made motor insurance very expensive.

IRDAI’s directive to unbundle compulsory personal accident covers, allows insurers to issue stand-alone personal accident covers. As an interim measure, insurers have been allowed to price personal accident covers based on their perceived analysis of risk — meaning some insurers could charge more than the Rs 750 annual premium.

Industry players said that this move comes as a positive for customers, who have more than one vehicle. “Currently, when a customer buys a policy for his car or bike, the personal accident cover comes as a mandatory part of the third-party motor cover for that vehicle. If s/he goes for a policy for his other car/bike, he has to again pay for the mandatory personal accident cover. Thus, a customer ends up making dual payment for same coverage,” said Devendra Rane, founder and CTO, Coverfox.com.

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