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Compulsory Personal Accident Cover in Car Insurance – Complete Guide

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In India, car insurance is a crucial aspect of vehicle ownership, providing a financial safety net in the event of an accident. One essential component of it is the compulsory personal accident cover. This protects the owner-driver from the financial impact caused by injuries or death resulting from an accident. Let’s delve deeper into why this cover is mandatory and its significance in car insurance.

Is it Important to Have a Personal Accident Cover?

Accidents can happen anytime, and when they do, the consequences can be severe, both physically and financially. A personal accident cover offers critical financial protection for the owner-driver in case of death or permanent disability resulting from an accident while driving the insured vehicle. It is particularly important for those who drive frequently or as profession, ensuring they have a safety net in case the unthinkable happens.

Without this cover, the owner-driver could face significant medical expenses, loss of income due to disability, and other financial burdens. The compulsory personal accident cover ensures that these risks are mitigated by offering compensation for these eventualities.

What is Covered under Personal Accident Cover?

A compulsory personal accident cover typically includes the following:

1. Death:

If the insured owner-driver dies in an accident, the cover provides a lump sum payment to the nominee.

2. Permanent Disability:

If the owner-driver suffers from permanent disability due to an accident, the cover offers compensation, helping with medical expenses and loss of earnings.

3. Partial Disability:

In cases with partial disability, the cover offers a percentage of the full compensation based on the extent of disability.

4. Medical Expenses:

Though not always included, many insurers cover medical expenses for injuries sustained in an accident under the personal accident cover.

The compulsory personal accident cover can also be extended to other riders or passengers, depending on the policy chosen. This protection ensures that the financial burden is reduced in case of unfortunate events on the road.

Benefits of Personal Accident Cover

The compulsory personal accident cover comes with several significant benefits:

1. Financial Protection:

The most crucial benefit is the financial compensation in the event of injury, disability, or death. This protection helps policyholders manage medical bills and expenses without facing financial hardship.

2. Income Replacement:

If the owner-driver cannot work due to accident-related injuries, this cover ensures that the lost income is partially compensated.

3. Peace of Mind:

Knowing that you have coverage for accident-related risks brings peace of mind, especially for individuals who rely on their vehicles for commuting or livelihood.

4. Affordable Premium:

The premium for this cover is relatively low, making it an accessible safety net for most car owners.

Is it Mandatory to Have a Personal Accident Cover?

Yes, under Indian law, compulsory personal accident cover is needed for all vehicle owners. According to the Insurance Regulatory and Development Authority of India (IRDAI), since September 20, 2018, this cover must be included with all car insurance policies, whether it is third-party or comprehensive car insurance. This was introduced in response to the increasing number of accidents involving owner-drivers, where the financial consequences were significant, particularly in cases of death or permanent disability.

The Motor Vehicles Amendment Act 2019 also reiterated this requirement, highlighting the importance of this cover in ensuring financial security for car owners.

Updates and Changes to Personal Accident Cover

Several updates were made to the compulsory personal accident cover following the 2019 amendment. Key changes include:

1. Higher Coverage:

The sum insured for the personal accident cover was increased to ₹15 lakh. This amount provides a more adequate financial cushion for the owner-driver in case of accidents.

2. Standalone Personal Accident Policies:

If the owner-driver already holds a standalone personal accident policy that covers up to ₹15 lakh, they are not required to buy an additional cover under their car insurance policy.

3. Duration of Coverage:

The compulsory personal accident cover can now be purchased for a duration of one to five years, depending on the owner-driver’s preference. This flexibility allows car owners to choose the coverage duration that suits their needs.

4. Vehicle Ownership:

Vehicles owned by companies or organisations are exempt from this requirement, as they do not have to pay the additional premium for the compulsory personal accident cover.

Additionally, the new guidelines specify that car owners who have multiple vehicles only need to pay for the compulsory personal accident cover for one. This change helps reduce the financial burden on owners.

Conclusion

Compulsory personal accident cover is an essential component of car insurance, offering protection against the financial impact of accidents. It ensures car owners have a safety net in case of injury, disability, or death while driving. It is available as an add-on with comprehensive and third-party car insurance. By making personal accident coverage mandatory, the government has ensured that car owners are financially supported in times of crisis. If you own a vehicle, it is crucial to understand the benefits of this cover and ensure that you have the right protection in place.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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