- Date : 13/12/2018
- Read: 3 mins
The change has been implemented by the Insurance Regulatory Authority of India (IRDAI) via a circular
This means an individual who owns or drives more than two vehicles can opt for a single CPA that will extend insurance cover to all cars driven by the policyholder, along with other third-party motor insurance. This insurance will be valid for a year from the date of purchase.
The change was implemented by the Insurance Regulatory Authority of India (IRDAI) via a circular after considering feedback from various sources that pointed out lacunae in the existing personal accident covers that many drivers/owners already had.
As per the IRDAI, if a driver/owner already has a personal accident cover of Rs 15 lakh against death and permanent disability (total or partial), they need not purchase additional coverage. With the unbundling of the CPA from third-party cover, drivers/owners can save on repetitive insurance cost.
The choice remains with the policyholder whether they want either third-party coverage or opt for a standalone CPA. In the event the policyholder opts for a standalone CPA, the ‘liability only’ or ‘package’ policy will be deleted.
Earlier, in September this year, the IRDAI had increased the mandatory personal accident cover for car and bike owners from Rs 2 lakh and Rs 1 lakh respectively to Rs 15 lakh for all vehicle owners, at a premium of Rs 750 per year.
With the increase in CPA, all drivers/owners will be eligible for insurance benefits arising from death or permanent disability, which was made mandatory following the judgment from the Madras High Court in October 2017.
However, with the new product, the IRDAI has allowed insurers to price the cover based on the risks involved. Which means the actual cost may be much higher for policyholders than the Rs 750 charged presently.
Insurers will have to file for the new CPA products and the respective pricing by 15th January 2019 as per the IRDAI circular under the ‘File and Use’ guidelines.
It will not be compulsory for policyholders to purchase the CPA from the same insurer from whom the third-party cover has been bought, which allows for greater customisation of the insurance product and possibly better pricing options for consumers.
The new changes are thereby expected to offer more benefits to consumers.