Big Changes Made to Vehicular Insurance Policy: Here’s What You Need to Know

When it comes to vehicle insurance, there are a number of finer points, you must keep in mind.

By Rayomand Engineer

October 4, 2018

It just takes a fleeting moment to turn an enjoyable drive into a total disaster. In instances like these, it helps to have comprehensive vehicular insurance.

Take a 2011 case of two men riding a motorcycle. The vehicle belonged to the pillion rider, under whose name it was duly registered. The bike was being driven by a friend at the time. After a sudden swerve to avoid hitting a cyclist, the bike crashed, killing the bike’s owner.

When the wife of the deceased approached the Motor Accident Claims Tribunal, the jury announced a compensation of Rs 53 lakh under 3rd-party insurance cover.

There have been policy changes in vehicle insurance. Image Credit:- G Balaji Bala

However, United India Insurance appealed against this order, as the insurance cover was granted to 3rd parties, and not vehicle owners. Under the policy, just Rs 1 lakh was granted to the vehicle’s owner.

Well, that incident has sparked a change of law. According to the Financial Express, here are some changes to keep in mind:

1. All vehicle insurance policies will now include a personal accident cover worth Rs 15 lakh, in case the owner dies while driving or riding.

2. This new rule is all set to help families of 2-wheeler accident victims, who are mostly underinsured. Through a circular, the Insurance Regulatory and Development Authority (IRDA), directed all 3rd-party insurance companies to include the Rs 15 lakh cover, to all vehicle owners or drivers, for 2-wheelers, 3-wheelers, passenger and commercial vehicles, for an additional premium of Rs 750 per year (annual insurance policy). This scheme is under the mandatory insurance cover that is compulsory for all vehicle owners.

3. The IRDA has said that respective insurance providers will decide on how to price long-term policies. Under the present rule, all insurers provide long-term liability cover of five years for bike and scooter insurance and three years for cars and SUVs. Now, insurance and cover for vehicles will compulsorily have to be included in both comprehensive and 3rd-party insurance for cars and other vehicles.

4. Following the aforementioned accident case, the Madras High Court in October 2017 directed IRDAI to bump the personal accident cover from Rs 1 lakh to Rs 15 lakh. The circular stated that the cover was provided to the owner-driver, and this includes him/her travelling as a co-passenger.

5. The United Insurance Company accepted the Madras HC’s order and said the present scheme was unfortunate for vehicle owners, who end up paying the premium for risks confronted by the 3rd-party, without adequate compensation in return. The court also directed the insurance cover to provide a higher personal insurance accident cover for the owner of the vehicle who is also the driver.

(Edited by Shruti Singhal)

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