Irdai adds Rs750 driver cover to vehicle insurance premium
24 September 2018
The Insurance Regulatory and Development Authority of India (Irdai) had directed all general insurance companies to provide a minimum of Rs15 lakh under compulsory personal accident cover for owner-driver under Liability Only to all classes of vehicles at the premium rate of Rs750 per annum, adding to the already huge insurance burden on vehicle owners.
This rate, however, will be valid until further notice, Irdai said, adding, “A higher CSI may be provided over and above Rs15,00,000 through Optional Covers under Liability Only and under Section lll of Package Policies/ Bundled.
Insurers have been asked to start issuing such covers effective from the date of receipt of Irdai circular and in any case ensure that the filing for these is done under File and Use Guidelines on or before 25 October 2018.
“The cover is provided to the owner-driver whilst driving the vehicle — including mounting into/dismounting from or travelling in the insured vehicle as a co-driver,” Irdai said in its circular.
While the insurance has to be provided mandatorily with both comprehensive and third-party covers, the regulator has left it to companies to decide on how to price long-term policies.
An earlier order makes it mandatory for insurers to offer long-term third-party liability cover of five years for two wheelers and three years for four wheelers.
While this will provide some succour to road accident victims, it adds to the ever increasing burden on vehicle owners.
Currently, the capital sum insured (CSI) under this section for motorised two-wheelers and private cars/commercial vehicles is Rs1 lakh and Rs2 lakh, respectively. However, a few general insurers have been offering add-on covers under package policies with higher CSI over and above the stipulated on payment of additional premium.
Insurance companies welcomed the regulator’s move as the enhanced premium will help them to more effectively cover their financial commitments while meeting accident claims.
Irdai’s move to enhance vehicle insurance premiums comes in the wake of a Madras high court judgement on October 2017, directing the regulator to hike the personal accident cover from the existing Rs 1 lakh to not less than Rs15 lakh ‘to add to some succour or solace to victims of road accidents, who are owners of vehicles, who may sustain bodily injury or death’.