Personal Accident Cover in Car Insurance

It is easy to be in the ‘It won’t happen to me’ bubble as far as accidents or injuries are concerned. This is one of the primary reasons for low life/health insurance penetration in the country. Even among those who are protected by insurance, the amount of coverage opted for is found to be dismally low.

As far as car insurance is concerned, a minimal level of protection is mandated by the Motor Vehicles Act, 1988. This ensures that a majority of the vehicles plying on the roads are covered for at least third-party liabilities. But accidents do happen, and the impact that it has on the family of the victim could be devastating.

Although it may not be the best thing to discuss at your dinner table, it is recommended that you talk about insurance with your family and buy appropriate coverage. Buying a Personal Accident cover for yourself and your dependents is a very wise thing to do, considering the alarming number of accidental deaths reported in the country today.

You may be under the assumption that the Personal Accident cover is a part of your motor insurance policy. But this may not be true, particularly if you have only opted for a limited cover of third-party liability insurance. So, ensure that you have sufficient car insurance protection, particularly personal accident coverage.

What Does Personal Accident Car Insurance Cover?

The Personal Accident cover offers financial assistance to the family of the insured if he/she faces disablement or death from an accident involving the insured car. An accident can lead to either of the following eventualities:

• Temporary disability - If the insured faces temporary total disability from an accident, the insurance will offer compensation to his/her family for the entire duration of the disability. Most insurance companies make the payment on a weekly basis for a maximum of 52 weeks. This payment will be a big relief to the family of the victim, particularly if he/she is the sole earning member. Car insurance companies do not usually offer any compensation for temporary partial disabilities. Even if they do, it will not be more than 20% of the sum assured.
• Permanent disability - If the insured person faces permanent total disability in an accident, he/she will receive the entire sum assured under the Personal Accident cover. If he/she suffers permanent partial disability, a pre-defined percentage of the sum assured is offered as compensation. This percentage varies between insurance companies; so you should read the policy documentation carefully and be aware of the extent of coverage.
• Accidental death - In case the insured individual faces death in an accident, the entire sum assured under the Personal Accident cover will be offered as compensation to the nominee. However, this is offered only if the victim faces death within a specific time period from the date of the accident. Usually, this period is between 90 and 180 days.

The comprehensive car insurance policy has an in-built Personal Accident cover that protects the owner/driver of the insured vehicle. If the passengers also need accidental cover, a separate add-on cover will have to be purchased and attached to the policy. Most car insurance companies offer the Personal Accident cover for the named passengers that can fortify your base policy.

Some insurance companies offer Personal Accident cover for the owner/driver along with their third-party liability plans. Since this is a very useful add-on cover, all car owners should ideally buy this cover even if it is not part of their base policy.

What Does The Personal Accident Cover Exclude?

While the Personal Accident cover protects the owner/driver of the insured vehicle, the insurance company will not honour a claim against the policy in the following situations:

• If the death/disability was intentional and self-inflicted
• If the death/disability was due to a suicide attempt
• If the insured was driving under the influence of alcohol or drugs
• If the vehicle was not driven by the named driver in the policy
• If the driver did not possess a valid driving license
• If the disability/death was due to participation in dangerous sports or other such activities

Road accidents can create a lot of wreckage in the finances of a household. Being prepared monetarily is important to cope with a major accident that can result in disability or death of an individual.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017