Compulsory Personal Accident Cover: Latest Changes

IRDAI (The Insurance Regulatory and Development Authority of India) on September 20, 2018, announced new rules that will be applicable while purchasing and renewing two-wheeler & car insurance policies.

The changes in the policy were made because it was noticed that the existing CPA (Compulsory Personal Accident) cover was very low and insufficient. The changes have been made to the component marked in Red. In India, all vehicle owners must buy third-party liability insurance. This third party liability insurance has two components:

1. Third Party - This component provides coverage against the loss or damage done to third parties (people and property) due to an accident involving your insured vehicle.

2. CPA Cover for Owner-Driver - This component provides coverage in case of death or permanent disability of the owner-driver, i.e. you due to an accident either while driving or riding your insured vehicle.

What Is a Compulsory Personal Accident (CPA) Cover?

A CPA cover is a mandatory insurance component for the owner-driver, included in both third-party and comprehensive car insurance plans. It can also be added to an existing policy as an extension.

Key Features of CPA Cover

1. Provides monetary compensation of up to ₹15 lakh for bodily injuries, disabilities, or death resulting from an accident.

2. Eligibility requires the policyholder to have a valid driving license.

This cover ensures financial support for medical expenses and loss of income due to accident-related injuries, making it an essential safety net for car owners.

Also Read: 24x7 Roadside Assistance Cover: A Must-Have Motor Insurance Add-On

Is It Mandatory to Have a Personal Accident Cover?

Initially, under the Motor Vehicles Act, 1988, only third-party car insurance was mandatory. However, with the rise in car ownership in India, there has been a significant increase in claims for bodily injuries, particularly involving owner-drivers.

To address this gap, Personal Accident (PA) Cover was introduced as a mandatory add-on with car insurance policies. It ensures compensation for owner-drivers in case of injuries sustained during accidents.

Why is CPA Cover Mandatory in India?

CPA cover provides guaranteed financial security and ensures safety for the vehicle owner. Here is a detailed overview of why CPA cover is mandatory in India:

1. Required by Law: A Compulsory Personal Accident (CPA) cover is mandatory under the Motor Vehicles Act 1988. It is regulated by the IRDAI.

2. Protects the Vehicle Owner: The CPA provides financial support in case of death of the vehicle owner or if the owner suffers a permanent disability in an accident.

3. Separate from Vehicle Damage: You can receive the benefit of the cover even if your car is not damaged.

4. Financial Support: The policy pays a fixed compensation to you or your nominee. It depends on the nature of the claim.

5. Encourages Responsible Driving: This mandatory coverage helps encourage safe driving, and it strengthens awareness about road safety.

Updates Under the Motor Vehicles Amendment Act, 2019

The Motor Vehicles Amendment Act, 2019, revised the rule on mandatory Personal Accident Cover with the following exceptions:

Existing Accident Insurance

If the owner-driver already has a standalone personal accident policy with a coverage amount of up to ₹15 lakh, they are not required to purchase an additional PA cover with a new car insurance policy.

Coverage with Another Vehicle

If the owner-driver already has a personal accident cover linked to another vehicle's insurance policy, they are exempt from buying a new PA cover for subsequent vehicles.

Changes in Third Party Liability Insurance

The following are the changes in the third party liability insurance:

1. The sum insured (SI) for TP cover has been increased to ₹15 lakhs for all the vehicles. Earlier, the SI for two-wheelers was ₹1 lakh and for cars was ₹2 lakhs.

2. The TP component of the third party liability insurance for brand new policies has to be mandatorily purchased for 5 years. While the PA cover for owner-driver can be purchased for either 1 or more years, with the maximum limit of 5 years.

3. The TP component of the third party liability insurance for brand new bike insurance policies has to be mandatorily purchased for 3 years. While the PA cover for owner-driver can be purchased for either 1 or more years, with the maximum limit of 3 years.

4. Owing to the increase in Sum Insured, the premium amount for PA cover for owner-driver for 1 year has been fixed at ₹331 excluding GST. Earlier, the premium amount was ₹50 for two-wheelers and ₹100 for cars.

5. The PA cover cannot be offered to the vehicles which are owned by any company or organization. Thus, the vehicles owned by the companies do not have to pay the additional premium for PA cover.

6. A person owning more than 1 vehicle needs to pay the premium amount for PA cover for only one vehicle. This premium amount can be used for providing compensation in case any of the insured vehicles owned by the owner-driver suffers an accident causing death or permanent disability of the owner-driver.

These changes have been rolled out for all the motor insurance policies (new purchase or renewal process).

Also Read: Vehicle Insurance Claim Process For A Stolen Vehicle

Benefits Of Personal Accident Cover

Personal accident cover offers financial protection if the insured owner-driver is injured or loses their life in a road accident. Here are the key benefits:

Financial Support for Medical Expenses

An accident can lead to unexpected medical bills. Personal accident cover helps reduce the financial burden by covering eligible medical expenses, depending on the policy terms and conditions. This may include hospitalisation, surgery, treatment, and rehabilitation costs.

Compensation for Permanent Disability

If an accident results in permanent disability, the policy provides financial compensation. The payout can help you manage daily expenses, home modifications, assistive equipment, or long-term care needs. Claims are settled according to the policy terms and conditions.

Support for Loss of Income

A serious injury may keep you away from work for an extended period. The compensation offered under the policy can help ease the financial impact and support your regular expenses during recovery, subject to policy terms.

Financial Assistance in Case of Death

If the insured owner-driver dies in an accident, the nominee receives a lump sum benefit. This amount can help the family manage immediate financial needs, including funeral expenses and other essential costs, as per the policy terms.

Peace of Mind

Knowing that financial support is available during difficult times offers reassurance. It allows you and your family to focus on recovery without worrying about immediate financial stress.

24x7 Protection

The cover remains active around the clock, providing protection whenever an eligible accident occurs during the policy period.

Ambulance and Emergency Assistance

Some policies also include ambulance and emergency care benefits. The exact coverage depends on your policy's terms and conditions.

How to Claim CPA Cover?

You can easily claim your CPA cover by informing your insurer about the accident as soon as possible. After informing your insurer, you need to follow these quick steps:

1. Submit the required documents, including the FIR, hospital records, and medical certificates.

2. Provide a copy of the policy, identity proof, and nominee details.

3. In case of death, submit the death certificate along with the nominee's identity proof.

4. Bajaj General Insurance also offers a digital claims process, making claim submission faster and more convenient.

The new regulations are still settling in, and the insurance companies are complying with these changes to provide the best motor insurance plans to their esteemed customers.

Also Read: Importance of Motor Vehicle Insurance: Nature, Scope, and Key Benefits

Final Words

Compulsory Personal Accident (CPA) Cover is an essential component of motor insurance that provides financial protection against accidental death or permanent disability of the vehicle owner-driver.

Understanding its mandatory requirements, coverage, benefits, and claim process can help you stay compliant with regulations while ensuring financial security during unforeseen events. Choosing the right motor insurance policy with adequate CPA coverage offers added peace of mind for every journey.

Frequently Asked Questions

How much compensation does CPA cover?

A Compulsory Personal Accident (CPA) cover can provide you with compensation of up to ₹15 lakh. The benefit is payable if the insured owner-driver suffers accidental death or permanent total disability.

Can I opt out of CPA cover if I already have personal accident insurance?

Yes, but in certain cases. You may opt out of CPA cover if you already have a standalone personal accident policy with ₹15 lakh coverage. Your insurer may ask for proof before approving the exemption.

What documents do I need to submit when I register a claim?

The documents you need to require depends on the claim. In most cases, you need the FIR, hospital or medical records, a valid ID proof, and the policy document. A death certificate or disability certificate is also required when applicable.

Please visit our website or reach out to us via our Toll-Free number if you have any queries regarding the changes made in the Personal Accident Cover. We will keep updating this write-up to include all the latest changes made in the motor insurance policies. Requesting you to keep watching this space for more details.