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Old 28th November 2017, 14:21   #1
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Smile Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

As it is known that Personal Accident cover for owner/driver is mandatory part of the Third party Liability premium. At present the maximum cover an owner/driver can have is 2L for a 4 wheeler and 1L for a 2 wheeler. This cover of 2L for a 4 wheeler costs Rs 100 as premium and is included by default along with the TPL cover premium. By far this is cheapest PA cover which is provided by all the Insurance cos considering that market cost for a 2L PA cover would be between 1100 to 1500 rs. Is this PA cover of 2L sufficient in these present times when the medical costs have sky rocketed considering the fact that the existing PA cover was set up 15 years back?

In case of death of the owner in a motor accident is 2L sufficient for the dependents? The Madras HC has directed to IRDA to revise this amount to 15L as minimum enabling vehicle owners paying premium to get adequate compensation in the event of death or bodily injury. This would be applicable if the owner dies in an accident which does not involve another vehicle. In case another vehicle is involved, TPL would kick in and the compensation would be decided by the Motor tribunals.

Refer to the article as below:
https://economictimes.indiatimes.com...w/61306312.cms

Although I personally have a PA cover from my employer, do not have anything outside independant cover as such considering that I daily commute to office using my personal car and I drive personally. The PA cover could be separately bought along with the term policies or independent policy. So should IRDA hike the mandatory PA cover to 15L which would mean increase in annual premium? I don't recollect any changes in this regards in the revised MVA.

Presently the structure of personal accident payout is as attached.
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Old 28th November 2017, 14:33   #2
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Default Re: Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

This is a welcome move by the Madras HC. Good that one of the apex judiciary bodies realizes that changing times means that a change is needed with respect to the laws and amendments. It would be interesting to see how the insurance companies react to it.
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Old 28th November 2017, 16:51   #3
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Default Re: Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

I think this will unnecessarily increase the premium. Should be left as a choice to the owner. Further, a person covered by his company's group insurance will unnecessarily be forced to pay the extra premium.

Have this doubt - most of the policies are under the name of the vehicle owner. In case he gives the car to his friend and the guy crashes the car, can the next of kin of the friend sue the owner (or demand compensation) if he had only the basic coverage? On one side, it maybe possible that the owner has other accident insurance and doesn't need one from his motor vehicle policy, but the friend may not have any additional insurance.

Last edited by blackwasp : 28th November 2017 at 16:52.
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Old 28th November 2017, 18:25   #4
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Default Re: Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

Quote:
Originally Posted by blackwasp View Post
Have this doubt - most of the policies are under the name of the vehicle owner. In case he gives the car to his friend and the guy crashes the car, can the next of kin of the friend sue the owner (or demand compensation) if he had only the basic coverage? On one side, it maybe possible that the owner has other accident insurance and doesn't need one from his motor vehicle policy, but the friend may not have any additional insurance.
If missing Paid-Driver coverage or PA Cover for unnamed passenger and kin of affected goes to Court for seeking compensation, owner can held responsible. Most likely compensation will be recovered from owner (depending on court finding fault with owner). It happened to person known to me, court found owner guilt at not maintaining car and not having *solid* proof of informing the same to affected before handing over the key. It depends on your lawyer vs their lawyer.

So do not let anyone drive your vehicle if you do not have insurance.
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Old 28th November 2017, 23:19   #5
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Default Re: Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

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Originally Posted by RaguHolla View Post

So do not let anyone drive your vehicle if you do not have insurance.
I'm not talking about missing cover, rather the amount of it. E.g. I have Rs. 1,00,000 (mandatory) cover but not the optional (Rs. 15,00,000) cover. What happens in such a scenario?
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Old 29th November 2017, 08:46   #6
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Smile Re: Is Personal Accident cover in Motor Insurance adequate? HC thinks otherwise

Quote:
Originally Posted by blackwasp View Post
I think this will unnecessarily increase the premium. Should be left as a choice to the owner. Further, a person covered by his company's group insurance will unnecessarily be forced to pay the extra premium.

Have this doubt - most of the policies are under the name of the vehicle owner. In case he gives the car to his friend and the guy crashes the car, can the next of kin of the friend sue the owner (or demand compensation) if he had only the basic coverage? On one side, it maybe possible that the owner has other accident insurance and doesn't need one from his motor vehicle policy, but the friend may not have any additional insurance.
The present PA cover being provided by the Insurance co is at a very nominal premium, peanuts compared to the PA cover being available if taken independently from Insurance co. So I don't think there would be a substantial increase in the premium and since this would be mandatory along with the TPL, compensation in case of the death of the owner/driver would be at par with the present rates. Of course people can debate that a term life plan would be beneficial in case of accidental deaths but looking at the Insurance penetration in the Indian market, increasing PA cover would be really beneficial.

Regarding your other query, if the Insured has opted for PA cover for any named person other than paid driver/cleaner, then a claim can be made. I will need to check the PA cover available. But above can be done only if the owner confirms the person driving the car in his absence is a paid driver or employee and that the claim will be subject to owner's approval.

Why would the kin of the friend in your reference sue the owner for insufficient PA cover? Isn't the friend responsible for his acts. Yes the owner would also be responsible for giving the friend his car but that would be an act of trust.

Quote:
Originally Posted by RaguHolla View Post
If missing Paid-Driver coverage or PA Cover for unnamed passenger and kin of affected goes to Court for seeking compensation, owner can held responsible. Most likely compensation will be recovered from owner (depending on court finding fault with owner).
Owner cannot be held responsible for accident caused by any unnamed passenger or Named person other than paid driver/cleaner. Compensation will not be paid by the owner but by the Insurance co provided the necessary TPL premiums are taken and paid.
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