IRDAI has asked insurers to provide a minimum cover of Rs.15 lakh under PAC for Owner-Driver at the premium rate of Rs 750 per annum for annual policy.
The compulsory personal accident cover for owner-driven vehicles under motor insurance policies has been increased from Rs 2 lakh to Rs 15 lakh.
However, insurance companies have time until October 25, 2018 to file the products under the File and Use Guidelines.
How much is the cover
Currently, the personal accident cover (PAC) is capped at Rs 1 lakh for two-wheelers and Rs 2 lakh for private or commercial cars. The premium charged for cars is Rs 100, excluding taxes. The PAC is for the individual driver of the vehicle while travelling, mounting or dismounting from the car. Optional personal accident covers for co-passengers are also available. Some insurers have been providing higher cover at an additional premium.
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The new rules
Now, the Insurance Regulatory and Development Authority of India (Irdai) has asked insurers to provide a minimum cover of Rs 15 lakh under PAC for owner-driver vehicles at a premium of Rs 750 per annum for annual policies. Insurers can offer higher covers in multiples of Rs 1 lakh or Rs 5 lakh as well but the minimum has to be Rs 15 lakh.
What it covers
The PAC is a compulsory complement of a motor insurance policy and is available both for a third-party cover and a comprehensive cover that includes own damage liability. The owner of an insured vehicle holding an ‘effective’ driving license is termed as Owner-Driver for a personal accident cover. The cover is provided to the ‘Owner-Driver’ while driving the vehicle including mounting onto or dismounting from or traveling in the insured vehicle as a co-driver.
Taken together with IRDAI’s new rules of third-party insurance wherein the third-party premium had to be compulsorily paid for 3 and 5 years for cars and two-wheelers respectively, this new move will make vehicle owners shell out more upfront. “The premium to be paid will go up by Rs.650 + GST in Cars and Rs.700 + GST for bikes when they renew their single year policy next time, says Tarun Mathur, Chief Business Officer- General Insurance, Policybazaar.com
However, while the new rules of third-party insurance applies only on cars and two-wheelers purchased after September 1, 2018, the hike in the PAC applies to all motor insurance policies. In nutshell, one will end up paying an additional amount of Rs 650/700 per annum for cars and two-wheelers respectively and will in turn get a PAC of Rs 15 lakh instead of Rs 2 lakh and Rs 1 lakh respectively.