All you need to know about personal accident cover in car insurance

Date : 11/06/2020
Read: 5 mins

Everything you ever wanted to know about personal accident cover offered in car insurance.

All you need to know about personal accident cover in car insurance

A personal accident (PA) cover in a car insurance policy is available as an add-on feature. Insurance companies are permitted to offer PA cover in multiples of Rs 1 lakh or Rs 5 lakh, with a minimum mandatory cover of Rs 15 lakhs. PA cover offers financial protection in case one suffers an accident resulting in death or severe injury. While a standalone car insurance policy covers the financial cost of damage to the vehicle, after an accident, often the victims are left high and dry without financial assistance. This is due to the lack of a medical policy or life insurance. In other words, the inclusion of a personal accident cover in car insurance would offer financial covers for both – man and his car.

Features of personal accident cover in car insurance:

Cover in case of permanent disability:

Accident resulting in total disability: The insured is eligible to avail the entire sum assured.
Accident resulting in partial disability: The insurer provides a pre-determined per cent of the sum assured as per the policy terms and extent of disability.

Cover in case of temporary disability:

Accident resulting in total disability: The policyholder is entitled to weekly compensation for the tenure of the disability. Generally, the period is limited to a maximum of 52 weeks. This monetary sum is advantageous to the family members, in case the injured person is the sole breadwinner of the house.
Accident resulting in partial disability: There is no compensation provided by the insurance company.
The occurrence of death due to a vehicular accident: The nominee of the policyholder would be paid the entire sum assured. Certain insurers extend tax-free compensation to the nominee if the insured succumbs to the severe injuries caused by a road accident. Further, the amount may be disbursed in a one go lump sum or phased instalments.
Hospitalisation facility: Certain policies offer the benefit of monetary assistance to meet hospitalisation expenses, following a car accident.
Transportation of the dead body: As an additional feature, the insurer may also pay the nominee for transporting the mortal remains of the insured, in case of mortality.
Eligibility to claim cover: The cover is allowed only to an owner or driver of a vehicle, in possession of a valid driving license.
Cover extension in certain cases: In specific scenarios, the policy includes a clause that facilitates education grant to cover the costs of educating the dependent children of the insured. This may also be extended to loss of livelihood. All of this is subject to the policy terms.

Benefits of personal accident cover in car insurance

This cover offers timely financial help at the time of need. Providing protection to the person behind the wheel is more important than providing it for the vehicle. The former might entail an irreplaceable loss of life, while the latter is a material loss.
Policyholders can avail higher monetary amount in case they sustain serious injuries. Some insurers allow compensation for minor injuries as well. However, it must be kept in mind that higher monetary protections translate into higher premium payment.

With effect from 1st January 2019, the IRDAI has allowed unbundling of compulsory personal accident cover and issue of standalone cover. This eliminates the need to buy a new personal accident cover each time one buys a new vehicle, resulting in vehicular cost savings. This provision would be beneficial for policyholders who own a personal accident cover with a minimum sum assured of Rs 15 lakh, with protection against death and total or partial permanent disability. The policyholder enjoys the flexibility to opt for the CPA cover included in the liability only policy as currently prevalent or opt out of the CPA cover included in the package policy by availing a stand-alone CPA policy. Owing to the unbundling benefit, cover under the standalone CPA would be valid for damages towards injury sustained or death to all the vehicles owned by the owner-driver under the same policy.

Prior to September 2018, the premium for compulsory personal accident cover for a two-wheeler was Rs 50 for a cover of Rs 1 lakh, and Rs 100 in case of a private or commercial vehicle in case of Rs 2 lakh cover. With the cover bundled with motor insurance, mandatorily increased to Rs 15 lakh for all two-wheelers, private cars and commercial vehicles, the premium would increase to about Rs 750 (plus taxes). From Jan 2019, insurers are permitted to price the standalone PA cover as per risk metrics. This translates into a higher premium payment for standalone cover than the current Rs 750 premium fixed for bundled cover.

Conclusion

The personal accident cover rider incorporated within the car insurance prepares one for the worst eventuality on the road. It comes with financial protection in case of death and disablement suffered from a mishap, or an unexpected accident sustained, anywhere in the world. This resonates well with the saying ‘Hope for the best, prepare for the worst!’ Have a look at why SC made it mandatory for automakers to offer long-term third-party cover for new vehicles to develop a better understanding of the various covers provided with car insurances.

Features of personal accident cover in car insurance:

Cover in case of permanent disability:

Accident resulting in total disability: The insured is eligible to avail the entire sum assured.
Accident resulting in partial disability: The insurer provides a pre-determined per cent of the sum assured as per the policy terms and extent of disability.

Cover in case of temporary disability:

Accident resulting in total disability: The policyholder is entitled to weekly compensation for the tenure of the disability. Generally, the period is limited to a maximum of 52 weeks. This monetary sum is advantageous to the family members, in case the injured person is the sole breadwinner of the house.
Accident resulting in partial disability: There is no compensation provided by the insurance company.
The occurrence of death due to a vehicular accident: The nominee of the policyholder would be paid the entire sum assured. Certain insurers extend tax-free compensation to the nominee if the insured succumbs to the severe injuries caused by a road accident. Further, the amount may be disbursed in a one go lump sum or phased instalments.
Hospitalisation facility: Certain policies offer the benefit of monetary assistance to meet hospitalisation expenses, following a car accident.
Transportation of the dead body: As an additional feature, the insurer may also pay the nominee for transporting the mortal remains of the insured, in case of mortality.
Eligibility to claim cover: The cover is allowed only to an owner or driver of a vehicle, in possession of a valid driving license.
Cover extension in certain cases: In specific scenarios, the policy includes a clause that facilitates education grant to cover the costs of educating the dependent children of the insured. This may also be extended to loss of livelihood. All of this is subject to the policy terms.

Benefits of personal accident cover in car insurance

This cover offers timely financial help at the time of need. Providing protection to the person behind the wheel is more important than providing it for the vehicle. The former might entail an irreplaceable loss of life, while the latter is a material loss.
Policyholders can avail higher monetary amount in case they sustain serious injuries. Some insurers allow compensation for minor injuries as well. However, it must be kept in mind that higher monetary protections translate into higher premium payment.

Conclusion