In India, vehicle ownership necessitates car insurance, which offers a financial safety cushion in case of an accident. A vital element of this coverage is the mandatory personal accident cover. This safeguards the owner-driver against the financial repercussions resulting from injuries or fatalities caused by an accident. Let’s explore in more detail why this coverage is compulsory and its importance in car insurance.

Is it Important to Have a Personal Accident Cover?

Accidents can occur at any moment, and when they do, the aftermath can be grave, both physically and financially. A personal accident cover provides essential financial support for the owner-driver if they face death or permanent disability due to an accident while operating the insured vehicle. It is especially vital for those who drive frequently or as a profession, ensuring they possess a safety net if the unimaginable occurs.

In the absence of this cover, the owner-driver might encounter significant medical expenses, loss of income from disability, and other financial hardships. The mandatory personal accident cover guarantees that these risks are alleviated by providing compensation for such situations.

What is Covered under Personal Accident Cover?

A mandatory personal accident cover generally encompasses the following:

1. Death:
   • If the insured owner-driver passes away in an accident, the cover offers a lump sum payment to their nominee.
2. Permanent Disability:
   • If the owner-driver experiences permanent disability due to an accident, the cover provides compensation, assisting with medical costs and loss of income.
3. Partial Disability:
   • In instances of partial disability, the cover grants a percentage of the total compensation depending on the degree of disability.
4. Medical Expenses:
   • Although not always included, many insurers provide coverage for medical expenses related to injuries sustained in an accident under the personal accident cover.

The mandatory personal accident cover may also be extended to other riders or passengers, based on the chosen policy. This coverage helps lessen the financial load in the event of unfortunate incidents on the road.

Benefits of Personal Accident Cover

The compulsory personal accident cover presents several notable advantages:

1. Financial Protection:
   • The primary advantage is the financial compensation available in the event of injury, disability, or death. This coverage aids policyholders in managing medical costs and expenses without encountering financial distress.
2. Income Replacement:
   • If the owner-driver is unable to work due to injuries sustained in an accident, this cover ensures that a portion of the lost income is compensated.
3. Peace of Mind:
   • Having assurance that you are covered for accident-related risks provides peace of mind, particularly for those who rely on their vehicles for commuting or earning a livelihood.
4. Affordable Premium:
   • The premium for this coverage is relatively low, making it an attainable safety net for most car owners.

Is it Mandatory to Have a Personal Accident Cover?

Yes, under Indian law, mandatory personal accident insurance is required for every vehicle owner. As per the Insurance Regulatory and Development Authority of India (IRDAI), since September 20, 2018, this insurance must be part of all car insurance policies, regardless of whether it is third-party or comprehensive car insurance.

This regulation was established in reaction to the rising number of accidents involving owner-drivers, where the financial implications were considerable, especially in instances of death or permanent disability. The Motor Vehicles Amendment Act 2019 reaffirmed this necessity, emphasizing the significance of this insurance in providing financial protection for car owners.

Updates and Changes to Personal Accident Insurance

Several modifications were made to the mandatory personal accident insurance following the 2019 amendment. Key alterations include:

1. Higher Coverage:
   • The insured amount for the personal accident insurance was raised to ₹15 lakh. This figure offers a more sufficient financial safeguard for the owner-driver in case of accidents.
2. Standalone Personal Accident Policies:
   • If the owner-driver already possesses a standalone personal accident policy that covers up to ₹15 lakh, they are exempt from acquiring additional coverage under their car insurance policy.
3. Duration of Coverage:
   • The compulsory personal accident insurance can now be acquired for a period of one to five years, based on the owner-driver’s choice. This flexibility enables car owners to select the coverage length that meets their requirements.
4. Vehicle Ownership:
   • Vehicles owned by companies or organizations are excluded from this requirement, as they do not have to incur the extra premium for the compulsory personal accident insurance.
   • Furthermore, the updated guidelines stipulate that car owners with multiple vehicles are only obligated to pay for the compulsory personal accident insurance for one vehicle. This adjustment aids in alleviating the financial strain on owners.

Conclusion

Mandatory personal accident insurance is a vital aspect of car insurance, providing protection against the financial ramifications of accidents. It guarantees that car owners have a safety net in the event of injury, disability, or death while operating a vehicle. It is offered as an add-on with both comprehensive and third-party car insurance.

By enforcing personal accident coverage as compulsory, the government has ensured that car owners receive financial assistance during times of crisis. If you possess a vehicle, it is essential to comprehend the advantages of this insurance and confirm that you have the appropriate protection in place.