Safety belt, helmet, traffic rules: accident insurance rules
The death of businessman Cyrus Mistry in a car crash on September 4 has drawn attention to accident insurance. A standalone private plan protects against the financial impact of an accident.
“Personal Accident Insurance provides coverage for accidents that result in bodily injury, disability (partial or total), or accidental death,” said Naval Goel, founder and chief executive officer (CEO) of PolicyX.com.
“It always pays an insurance sum if a person dies in an accident. However, some private accident insurance companies also offer other types of coverage. Specifically, they pay a benefit if you have a permanent disability, and some also pay if you have a temporary disability but total disability,” says Kapil Mehta, co-founder of SecureNow.
What is covered and what is not
Common inclusions are medical expenses arising from accidental bodily injury and partial or total disability. If a policyholder dies in an accident, the family receives a flat-rate compensation amount. Personal accident plans stand alone or can be combined with health and life insurance.
“Aside from disability and death coverage, many accident insurance plans are well integrated to provide financial support to the insured’s dependents as they help provide educational services to their children as in many cases the individual’s ability to work can be completely or partially impaired after after the accident,” said Tarun Mathur, Chief Business Officer (CBO) of General Insurance Policybazaar.com.
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Personal accident insurance covers hospital stays, hospital follow-up care costs and cash benefits for a certain period of time. While the offering varies by insurer, it typically provides financial security against liability, medical expenses, hospitalization benefits, child education bonuses, permanent total disability, and accidental death insurance. Legal fees and funeral expenses are also covered.
It is important to understand and be aware of the exclusions. “Excluded are non-random scenarios such as suicide, natural death, pre-existing disability, influence of drugs, alcohol, etc.,” says Goel.
Accidents will not be paid if a policyholder is intoxicated. “Similarly if you have broken a law that does not get paid. Extreme negligence or engaging in adventure sports is also a problem,” says Mehta.
Why take out accident insurance
Insurance coverage is required for people who work in accident-prone occupations. Mehta says: “This is also relevant for most people under 50 because their chance of an accidental death is relatively higher compared to a natural death.”
When you take out insurance, choose protection against death and disability as a result of an accident. “The sum insured must be up to 100 times a person’s monthly income, depending on the insurance company chosen.” If someone travels abroad frequently, worldwide coverage is a must. It’s important to read the inclusions and exclusions of accident scenarios covered by the policy, such as occupational hazards, etc.,” says Mathur.
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A private accident policy must be renewed every year and the insurance cover starts from day one with no waiting period. “When deciding on private accident insurance, it is important to assess the number of breadwinners in the household and their relatives. If you need to support your family and children financially, you can choose the insurance that best suits your needs while also considering the nature of your work,” said TA Ramalingam, Chief Technical Officer (CTO) at Bajaj Allianz General Insurance.
Car Insurance and Accident
As part of motor vehicle insurance, the vehicle owner (either a two-wheeler or a four-wheeler) must take out accident insurance. “It is not necessary for the customer to buy them together with the car insurance. They can have an existing policy that covers Personal Accident or buy it as a standalone policy,” says Mathur.
Irrespective of whether a policyholder opts for fully comprehensive motor vehicle insurance or liability insurance, he is entitled to accident insurance. “PA auto insurance coverage pays for compensation in the event of personal injury, death or permanent disability resulting from an accident. The coverage limit is set at Rs 15 lakhs by IRDAI,” says Saurabh Jhunjhunwala. Assistant Vice President (AVP), Insurance Products & Distribution, Prabhudas Lilladher Wealth Pvt. Ltd with reference to the Insurance Regulatory and Development Authority of the Industry Regulatory Authority.
In the event of accidental death or total disability, the insurance company pays the entire sum insured to the nominee.
Car insurance payouts are significantly lower for personal accidents. “In general, it’s much better to buy a large amount of insurance that’s available in standalone accident insurance,” says Mehta. Note that the government has made accident insurance compulsory with motor insurance and as such it is built into motor insurance policies.
“The lack of PA coverage can lead to legal ramifications,” says Goel.
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No test is required to claim accident insurance. “The main benefit of our policy is that you don’t need any medical screening and it can be taken out individually. Accident insurance is by far the most important insurance policy,” says Sanjay Datta, Chief Underwriting, Claims and Reinsurance, ICICI Lombard General Insurance.
Frequently Asked Questions
When it comes to claims, many questions arise. A lot depends on the conditions as they vary from policy to policy and insurer to insurer. For example, if someone was not wearing a helmet and had an accident, would such a request be accepted? “Yes, claims are allowed. As we cannot determine the cause of the accident, neither death nor death can be attributed to “not wearing a helmet”. That is not legally tenable,” says Datta.
“If the local law requires the person to wear a helmet, the claim will not be paid,” says Mehta.
What if a person wasn’t buckled up and had an accident? The claim is admissible but not legally tenable if challenged in court. Some experts say that if the law requires wearing a seat belt, the claim will not be paid. Regarding speeding, Datta says, “This is subjective to determining an accident due to ‘speeding’ and gross negligence on the part of the driver, according to the First Information Report (FIR).”
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“If it is proven that an accident resulted from negligence or reckless behavior, such as not using a seat belt or helmet or speeding, the insurer can refuse to recognize the claim,” says Jhunjhunwala.
If a person has an accident in another country, will the claim pass? Ramalingam says, “If the insured has opted for a geographic extension of motor insurance and the insured has suffered an accident in the mutual geographic location, the PA claim will be settled according to the terms of the insurance.” Car insurance is usually limited to national borders.
For a smoother auto insurance claim, Mathur says, “It’s wise to obey traffic laws at all times and make sure you’re not drinking and not driving under the influence of substances.”