• HDFC
• 26 Sep 2018
• Knowledge Centre

HDFC, Tester

The Insurance Regulatory and Development Authority (IRDAI) has raised the minimum insurance cover for the vehicle’s owner-driver to Rs 15 lakh for an annual premium of Rs 750. As of now, the capital sum insured (CSI) under this section for motorized two-wheelers and private cars/commercial vehicles stands at Rs 1 lakh and Rs 2 lakh, respectively.

 

However, a few general insurers have been offering add-on covers under package policies with higher CSI, over and above the stipulated payment of additional premium. The regulator directed all general insurers to provide a minimum CSl of Rs 15 lakh under the Compulsory Personal Accident (CPA) cover for owner-driver under ‘Liability Only’ to all classes of vehicles at the premium rate of Rs 750 per annum for an annual policy.

 

IRDAI said in a circular, “A higher CSI may be provided over and above Rs 15,00,000 through optional covers under Liability Only and under Section lll of Package Policies/Bundled Covers on payment of additional premium at the option of the insured.”

 

Positive response

 

This move by the IRDAI has been welcomed by industry players. A publication has quoted Mr. Tapan Singhel, MD and CEO of Bajaj Allianz General Insurance as saying, “I believe it’s important to have an appropriate personal accident cover for effective financial support to the policy holders and their family members if she/he is disabled or succumbs to an injury due to an accident. This will address the issue of under-insurance to some extent. We, as a company, support and welcome this move.”

 

Insurers may start issuing such covers effective from the date of receipt of this circular, even while ensuring that the filing for these is done under the ‘File and Use Guidelines’ on or before 25th October 2018, the circular added. All other existing provisions applicable for Motor Third-Party Insurance will continue as before.

 

“The increase in minimum compensation for a personal accident under motor insurance for the owner of a vehicle is a welcome change. Following the directive to insurers for offering long-term motor insurance policies, this directive further emphasizes the importance of motor insurance among vehicle owners, ”Mr. Puneet Sahni, Head-Product Development, SBI General Insurance said in the report.

 

“The cover is provided to the owner whilst driving the vehicle and alighting into/out of the insured vehicle. The regulator has allowed provisions for add-on cover beyond Rs 15 lakh which will appropriately be compensated to the victim and their family for any financial burden, should an unfortunate situation arise,” he added.