Starting January 1, vehicle owners and drivers have the choice of buying a standalone personal accident cover, or purchase it as a bundled product along with their third-party motor insurance.
This means a person with two or more cars can purchase a single compulsory personal accident (CPA) cover. The cover will extend to all the vehicles driven by the policyholder, and have a validity of one year.
Earlier this year, a CPA of ₹15 lakh sum assured, which costs ₹750, was made mandatory with every vehicle insurance policy.
“Feedback has been received from various quarters wherein it has been pointed out that many owner-drivers already have existing general personal accident covers which ought to be taken cognisance of,” the Insurance Regulatory and Development Authority of India (IRDAI) said in a circular. Many people own more than one vehicle and should not have to buy separate CPAs for each vehicle, it added.
It has therefore decided to unbundle CPA cover from third-party cover.
“In the event the policyholder chooses to take a standalone CPA policy, the CPA cover offered as part of a ‘liability-only’ or ‘package’ policy shall be deleted,” the circular said. However, a policyholder can also opt for a traditional bundled policy.
IRDAI has asked insurers to file new standalone CPA products by January 15.
The regulator further said if an owner-driver already has a 24-hour personal accident cover against ‘Death and Permanent Disability (Total and Partial)’ for a sum insured of at least ₹15 lakh, he/she needn’t take a separate CPA cover.
Advantage customers
Insurers said the move will benefit customers, who get more options.
“The customer will now have a choice to replace the CPA cover either with a standalone PA policy or with one from any general insurer, and not necessarily take it from the insurer from whom he/she had purchased the third-party policy,” said Sajja Praveen Chowdary, Business Unit Head - Motor Insurance, Policybazaar.com. Insurers can also tailor their prices better, Chowdary added.
Onkar Kothari, Compliance Officer and Company Secretary, Bajaj Allianz General Insurance, said the circular is clarificatory. “Insurers have been asked to file standalone CPAs as products under the ‘File and Use’ guidelines along with their pricing,” he said.