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Personal Accident Cover in Car Insurance

Team AckoAug 26, 2022

Accidents happen, but some can be more serious than others, and it’s important to have a plan to cope with what happens next. Personal Accident Cover can help offer you financial assistance in case of an unfortunate incident.

Personal Accident Cover in Car Insurance

As per the Insurance Regulatory and Development Authority of India (IRDAI), if you purchase a car or bike insurance policy, a Personal Accident Insurance Cover of Rs.15 lakh is mandatory, if you do not have an existing cover. This policy protects you from financial liabilities in case of disability or death arising out of a motor accident.

What is Personal Accident Cover in Car Insurance:

As the name suggests, Personal Accident (PA) Cover in Car Insurance protects you against the risk of physical disability or death due to an accident. The cover is offered along with vehicle insurance similar to general insurance that offers financial compensation. 

Accidents might leave you permanently disabled, leaving a heavy burden due to medical and financial expenses. This personal accident coverage offers you the peace of mind about these expenses. And, in case of death, the nominee mentioned in the policy shall receive 100% compensation.

Personal Accident Insurance Coverage:

Under Acko Personal Accident Cover you can avail the below coverage benefits:

  • Permanent Total Disability: You are entitled to receive the entire sum insured in case of total disability. This is paid to the insured due to an unfortunate incident.

  • Accidental Death: The entire insured amount is paid to the nominee of the insured individual in case of an unfortunate event of death.

Under these circumstances, Acko undertakes to pay the compensation as per the below scale for death or bodily injuries sustained by the owner-driver of the car:

Nature of Injury Scale of Compensation
Death 100%
Loss of two limbs/loss of both eyesight/loss of one limb and one eyesight 100%
Loss of one limb/loss of one eyesight 50%
Permanent total disablement from injuries other than mentioned above 100%

Accident Covers Of All Types

This means, there are essentially four different types of accident covers.

What Who Is Covered Which Policy Compensation Limit
Accident Cover Third-party individual or people Third-party car insurance No limit
Personal Accident Cover Owner-driver Comprehensive car insurance or Compulsory Cover in Third Party Rs. 15 lakhs
Personal Accident Cover for Paid driver Paid drivers Optional cover in Comprehensive car insurance or Third Party As per Workmen Compensation Act.
Personal Accident cover for Unnamed Passengers Anyone who is riding in the car along with the driver Optional cover in Comprehensive car insurance or Third Party As per sum assured up to Rs. 2 lakh.

Why You Need Personal Accident Cover:

You may decide to opt for a personal insurance cover due to an unfortunate accident because you travel or work in a particularly risky environment. And, you may even find it challenging to make ends meet if you are unable to work due to injuries. A PA cover is a precautionary measure for you and your family and stays secure in case of financial instability. Certainly, a personal accident insurance policy can be useful for anyone.

Personal Accident Policy Claim Eligibility:

Compensation under this policy shall be payable directly to the insured or his/her legal representatives. This cover is subject to the below conditions that the owner-driver is:

  • The registered owner of the vehicle insured.

  • The insured named in this insurance policy.

  • A holder of a valid driving license listed under the provisions of Rule 3 of the Central Motor Vehicles Rules.

Personal Accident Insurance Cover Premium Rate:

The IRDAI, through a circular dated 20 September 2018, announced to increase the Compulsory Personal Accident Cover (CPA) to Rs.15 lakh. The authority also fixed the premium rate of PA cover at Rs.750 p.a. Earlier, the CPA for two-wheelers was fixed at Rs.1 lakh and for four-wheelers, it was Rs.2 lakh.

However, if you want to increase the sum insured with an additional premium, which ranges between Rs.300 and Rs.1,000.

This depends on the model of the car, age, where you stay, whether your existing insurance has expired or not, and the Insured’s Declared Value (IDV) of your vehicle. Also, if you have utilised the No-Claim Bonus (NCB) offered on the existing policy.

Personal Accident Cover Add-Ons:

Apart from your insurance cover, you can take advantage of the Add-ons, they are:

  • PA Cover for Paid Drivers, Cleaners and Conductors: With an additional premium, the insurer undertakes to pay compensation for bodily injury suffered by the paid driver/conductor/cleaner who is employed by you and the claim is of the insured vehicle.

  • PA Cover for Unnamed Passengers other than the person insured and the Paid Driver and Cleaner: By paying an additional premium, the insurer undertakes to pay the compensation for bodily injuries sustained by the passenger other than you and/or the paid driver/cleaner/a person employed.

Check: 3 Reasons Why A Third-party Car Insurance Is Not Enough

Benefits of Buying Personal Accident Insurance along with Car Insurance:

There are several benefits and advantages under this insurance cover, they are:

  • Financial assistance in the event of an unfortunate accident.

  • For an additional premium, unnamed passengers other than the insured, the insurer pays compensation similar to the primary policyholder.

  • Also, paid drivers or cleaners or conductors employed by you can be eligible for compensation with the payment of an additional premium and the compensation is similar to the insured.

What is Covered Under the Personal Accident Insurance:

As mentioned, the policy covers accidental death and permanent total disability, such as:

  • In the event of accidental death of the owner-driver, the nominee shall receive 100% of the sum insured.

  • In case of permanent disability, the insured shall receive 100% of the sum insured.

  • If the owner-driver loses both limbs/sight of both eyes/sight of one eye and one limb, the insured shall receive 100% of the sum insured.

  • If the owner-driver loses sight of one limb/one eye, the insured shall receive 50% of the sum insured.

  • With additional premium, the insured shall receive the sum insured for your paid driver/cleaner/conductor as well as unnamed passengers.

What is Not Covered Under the Personal Accident Insurance:

Under this insurance policy, the following are not covered:

  • Self-harming activities.

  • Death/disabilities in case of intoxication.

  • Death/disabilities arising out of illegal activities.

  • Death/disabilities during pregnancy or childbirth.

  • Death/disabilities arising out of adventure activities.

  • Death/disabilities due to war.

  • Pre-existing injuries.

  • Death/disabilities caused, sustained, or incurred outside the geographical area.

  • Death/disabilities directly or indirectly caused.

Compulsory Personal Accident (PA) Cover for owner-driver 

Meaning

A compulsory Personal Accident Cover is an insurance policy that offers you (owner-driver) protection against disability or death caused due to an accident. The owner-driver PA cover is a mandatory cover in addition to your car insurance policy. The car insurance policy protects your car, whereas the PA cover protects you. It reimburses your medical costs or offers compensation in case of death or disability caused by accidents.

For example, Mr A’s car was hit by a speeding truck that resulted in damages to his car and he sustained severe injuries, including a fractured leg. The doctors advised a complete bed rest until he recovered completely. He has to be off work for a month. However, Mr A was calm without much to worry about. While his injury hurt a lot, he wasn’t concerned since he had taken the compulsory PA cover for owner-driver. 

Unnamed passenger PA cover in car insurance

Apart from securing yourself with the Compulsory Personal Accident (CPA) cover, you can also secure passengers in the car. This can include your family, friends, or your paid driver. You can buy this add-on with the Comprehensive Car Insurance Policy.

At ACKO, under this Personal Accident Cover for unnamed passengers, you secure your near and dear ones travelling in your insured car at an additional premium amount.

Features of standalone owner-driver Personal Accident Cover

Here are the features of the compulsory PA cover for owner-driver.

  • Sum insured amount of up to Rs. 15 lakhs.

  • 100% compensation in case of demise of the insured arising due to an accident.

  • 100% compensation in case of permanent total disability arising from injuries sustained during an accident.

  • 50% compensation in case of loss of one limb or one eye.

Period of compulsory PA Cover

The Compulsory Personal Accident (CPA) cover is solely for the owner-driver of the insured vehicle and is a standalone insurance cover. The period or the tenure of the owner drive PA cover is 1-year. You need to buy the PA cover while buying or renewing the insurance policy. If you already hold Personal Accident Cover car insurance, you need not buy the PA cover for your second vehicle.

Compulsory PA cover premium

You can refer to our section for the compulsory PA cover premium rates for four-wheelers. The premium is based on the decision by the IRDAI. As per the apex body’s circular dated 20 September 20, the maximum sum insured amount is Rs. 15 lakhs under this cover.

What If I Have A Paid Driver?

Quite a valid point, actually. In fact, under the Workman Compensation Act, you are liable to pay compensation to an employee in case of injury or accident while at work.

Insurance companies understood this need. And that’s why they offered a separate add-on cover called ‘Accident cover for paid driver’. An additional amount of Rs. 50 has to be paid as an add-on in order to buy a Legal liability cover for the paid driver.

Under this cover, the insurer pays compensation to your driver in case of any injury, disability or even death. You can, thus, ensure your driver is protected too. During any accident-related injuries or death of the paid driver, the insurance company pays a specific compensation. Legal Liability to the paid driver comes under the Workmen’s Compensation Act, 1923, Fatal Accidents Act, 1855 and Common Law.

What About My Family Riding In The Car?

You can cover them too. In this case, you buy an add-on called ‘Personal Accident cover for unnamed passengers’. This extends to your family, friends or even colleagues—whoever travels with you in your car. You can get these add-ons when you buy a Comprehensive Car insurance policy at a small extra payment.

You can opt for a sum insured in multiples of Rs. 10,000, like Rs. 20,000, Rs. 30,000 till Rs. 2,00,000. The cost of the add-on will start from Rs. 5 to Rs. 100 per passenger.

Reasons to buy Compulsory Personal Accident (CPA) insurance on ACKO

Here are the reasons why you should buy the compulsory PA cover on ACKO.

The most important reason to buy CPA insurance is that it is legal compliance. Since it is mandatory, not owning one can invite penalties.

2. Coverage against accidental risks

The compulsory PA cover protects you against injuries and self hazards caused due to an accident.

3. Rs.15 lakhs coverage for accidental death

Your dependents get Rs.15 lakhs in case of your demise due to an accident to support their future.

4. Up to Rs.15 lakhs coverage for permanent disability

In case of a permanent disability arising from an accident, you get up to Rs.15 lakhs to support your finances or treatment costs.

5. 50% of sum insured in case of temporary disability

In case of a temporary disability, you get up to 50% of the sum insured to support your finances or treatment costs.

6. Paperless and no documentation experience

You can buy the compulsory PA cover online with ACKO. There is no paperwork involved to purchase the PA cover, and you don’t have to submit any documents to buy the cover.

Also, read: Vehicle Scrappage Policy in India

Accident Covers Are Mandatory

Imagine if you are stuck in traffic and are getting late to work. You realize the jam has been caused by a young man fighting with a car driver about an accident.

It turns out that the car had injured the young man’s elderly uncle. The injuries were serious and could lead to some disablement too. The young man was desperate and right in fighting for a justified compensation.

A lot of such accidents happen on Indian roads. To avoid problems caused by such accidents, the government came up with the Motor Vehicles Act, 1988. It made ‘Third-party’ car insurance mandatory. No person can drive a car without insurance.

Third-party Car Insurance Policy protects any damage caused to the third person or property on road. Benefits paid under Third Party Liability cover are

  • No limit on the compensation the insurer pays in case of personal injury, disability or death.

  • Third party property damage up to Rs. 7.5 Lacs

  • Personal Accident (PA) cover for owner driver, passenger, paid driver or employee

So does it cover injuries caused to the driver during an accident?

Generally, Third-party policies are often bundled with a ‘Personal Accident’ cover. PA cover for the owner driver is mandatory and is available at a nominal fee. So, if you suffer injuries due to an accident while driving your own car, the insurance company will pay a fixed amount as compensation.

Below are the conditions while buying a compulsory personal accident cover for owner driver

  1. The owner-driver has to be the registered owner of the car insured

  2. The owner-driver has to be the insured named in the car insurance policy

  3. The owner-driver has to hold a valid driving license

Also, read: Compulsory & Voluntary Excess in Car Insurance

FAQs:

What is the total compensation under the Personal Accident Cover in Car Insurance?

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The Insurance Regulatory and Development Authority of India (IRDAI) has mandated a PA cover of Rs.15 lakh for individuals buying motor insurance.

Do I have to Apply for a Different Personal Accident Policy if I have more than One Vehicle?

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You need not opt for accident insurance cover in all vehicles, just one policy is required as per the recent mandate announced by the IRDAI.

Are there any Add-Ons for this type of insurance cover?

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Yes, you can take advantage of Add-ons such as coverage for your paid driver/cleaner/conductor as well as unnamed passengers. However, you’ll have to pay an additional premium for the Add-ons.

What are the documents or information required to file a claim?

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While claiming the sum insured in case of an unfortunate event, below are the required documents – which are case-specific – and information required to process your claim:1. Policy number.2. Name and contact number of the insured.3. Date and time of the accident.4. Location of the accident.5. Description of the incident occurred and the extent of the loss.6. Death and post-mortem certificate.7. First Information Report (FIR).8. Medical reports and hospitalisation bills.

Can I Continue to Hold my Existing PA Insurance Policy and Opt for a Separate Vehicle Insurance?

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Yes, you can continue with your existing insurance company or you may opt for a better alternative based on your requirement while you choose separate car insurance as a standalone PA cover.

Why was the Motor Insurance Unbundled by the IRDAI to Not Include PA insurance cover part of the Vehicle Insurance?

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The IRDAI, in a statement, announced that it had received feedback from several quarters that various owner-drivers have an existing PA cover and if there’s a need to take an additional PA while purchasing a new vehicle. To address this issue, it unbundled vehicle insurance from the PA insurance cover.Also, it said that the fact owner-drivers may own more than one car needs to be taken into consideration so that the owner-driver does not have to take several PA insurance cover for each of his vehicles.

Is it Mandatory to opt for Long-Term PA Insurance Cover?

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It’s not mandatory to opt for a long-term PA cover and it’s your choice to opt for the one-year Compulsory Personal Accident (CPA) cover or the long-term CPA if you do not have one in place.

Is the Sum Insured Capped at Rs.15 Lakh?

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While the minimum has been raised from Rs.1 lakh / Rs.2 lakh, as the case may be, to Rs.15 lakh by the IRDAI for vehicles , you can opt for a higher than Rs. 15 lakhs insured amount in multiples of Rs.1 lakh or Rs.5 lakh with additional premium.

Has the IRDAI fixed the Personal Insurance Cover Premium rate for the Rs.15 Lakh?

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Yes, the IRDAI has fixed the premium rate at Rs.750 p.a for a cover of Rs.15 lakh for both four-wheelers and two-wheelers.

Can I Claim Tax Benefits Under the PA Cover?

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Unlike life or health insurance, PA insurance does not have any tax benefits under the Income Tax Act.

What is a standalone CPA policy?

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As per a notification by the IRDAI, effective 1 January 2019, customers need not buy separate compulsory PA cover for each new vehicle they purchase. The apex body has allowed insurers to issue a standalone Compulsory Personal Accident cover for owner-driver. Before this notification, customers had to buy the PA cover for every vehicle they purchased.

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