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Motor Insurance might Get Costlier with Newly Introduced Sum Insured for Personal Accident Cover by IRDA

Due to the increase in the sum insured, the auto insurance policies’ premiums will rise by minimum Rs 650. It is necessary for the personal accident cover, which one needs to buy for vehicle insurance. The IRDA of India has released a circular on the 20th September which states that all general insurance companies have to amplify the sum that is insured under the mandatory personal accident cover to Rs 15 Lakh. The existing cover is of Rs 1 Lakh for 2-wheelers and Rs 2 Lakh for 4-wheelers. The Madras high court directed the regulator and all insurance companies have time until 25th October to file the products, which should be in correspondence with all the new guidelines.

What is a necessary personal accident cover?

As per the India Motor Tariff in 2002, the motor insurance policy should also have a mandatory personal accident cover as a part of it. This type of cover is valid in both the cases: if an individual buys an only comprehensive policy or a third-party policy, which consists of both - the own-damage and third-party covers.

Till now, Rs 50 was the premium for a compulsory personal accident cover for a two-wheeler for a cover of ₹1 lakh. Rs100 was the premium for a private car or a commercial vehicle for a cover of ₹2 lakh. A uniform cover of Rs.15 Lakh is now applicable for all 2-wheelers, all private cars and any commercial vehicles at a premium of just Rs. 750 excluding taxes. As an add-on cover, an insurance company can also offer a higher sum insured for all personal accidents.