wo-wheeler buyers have to pay nearly 10% of the vehicle’s price upfront towards insurance premium, while car-buyers are seeing the cost of motor cover double from last month. The premiums have jumped up significantly thanks to two court orders: The first makes purchase of a long-term, third-party insurance cover mandatory, while the second forces vehicle owners to buy a Rs 15-lakh personal accident cover, which is priced exorbitantly by insurers.
Anyone buying a two-wheeler must mandatorily purchase a five-year, third party cover, and an annual personal accident cover. This is in addition to a comprehensive cover that is sold at the time of purchase of the vehicle. As a result, for a 150cc bike costing Rs 75,000, the insurance premium itself would work out to Rs 7,600.
In the case of cars, the owner must pay a premium for three years of third-party insurance and an additional Rs 750 towards a personal accident cover, in addition to the comprehensive cover sold by the dealer. For the buyer of a car with engine capacity of over 1000cc, the payout towards insurance has doubled to nearly Rs 20,000 from Rs 10,000 earlier.
Last week, IRDAI clarified that the personal accident cover can be paid in installments. However, insurance industry sources say that the rates are very high. Under the Pradhan Mantri Suraksha Bima Yojana, many non-life companies provide a personal accident cover of Rs 2 lakh for a premium of Rs 12. As against this, the prescribed Rs 750 premium for a Rs 15-lakh personal accident cover works out to Rs 50 per lakh.
“The personal accident cover under the PM Suraksha Bima Yojana is valid round the clock and provides protection from any form of accidental death. Under the motor personal accident cover, the protection is available only to the owner while he is driving the vehicle,” said an insurance official.
According to Segar Sampath Kumar, former general manager at New India Assurance, there is also a need to change the terms of the cover. The policy as it stands says that compensation will be paid for bodily injury or death sustained by the owner-driver of the vehicle in direct connection with the vehicle insured or while mounting into/dismounting from or travelling in the insured vehicle as a co-driver.
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