Compulsory personal accident cover

What is compulsory personal accident cover?

Compulsory personal accident (CPA) cover is the accident insurance for the owner-driver of a vehicle that Indian motor insurers attach to third party and package policies. It pays a fixed amount if the registered owner, while driving, mounting, dismounting or travelling in the insured vehicle as a co-driver, dies or suffers specified permanent disability in an accident. Since September 2018 the capital sum insured has been ₹15 lakh.

The third party section of a motor policy protects other people. CPA is there because the owner-driver is not a "third party" under their own policy and would otherwise have no accident cover from it.

How compulsory personal accident cover works in India

Sum insured and premium. In September 2018, after a Madras High Court order, IRDAI raised the minimum capital sum insured for owner-drivers to ₹15 lakh for all vehicle classes, with an annual premium of ₹750 set at the time. For standalone CPA, IRDAI later allowed insurers to price on their own actuarial basis as an interim measure, so check the current premium. Before that the cover was ₹1 lakh for two wheelers and ₹2 lakh for cars and commercial vehicles.

Scale of compensation. The standard wording pays:

Only one item is paid per accident, and the total in one policy period cannot exceed ₹15 lakh.

Standalone CPA. An IRDAI circular of December 2018 allowed insurers, from 1 January 2019, to sell CPA as a standalone policy as well as inside motor policies. A single standalone CPA can cover an owner-driver across several vehicles, so the owner does not need to pay for CPA with each vehicle's policy.

Who can skip it. An owner-driver who already holds a 24-hour personal accident policy covering death and permanent disability with a sum insured of at least ₹15 lakh does not need a separate CPA. Insurers ask for a declaration to this effect. CPA also does not apply where the owner is not an individual (for example a company-owned vehicle), and insurers commonly require the owner to hold a valid driving licence.

What it does not cover. Passengers and paid drivers are not covered by CPA. Insurers offer separate add-ons for unnamed passengers and legal liability to a paid driver.

What compulsory personal accident cover means for distribution

• Ask, record, and do not default. Because CPA can be waived when the owner has other PA cover, quote journeys now carry a CPA question. Agents and POSPs should ask the customer, record the answer and keep the declaration. Adding CPA without asking, or removing it to cut the price without the required declaration, both create problems at claim time.
• Multi-vehicle households. A family with a car and two wheelers registered to the same owner may be paying CPA more than once. A standalone CPA, or a personal accident policy of ₹15 lakh or more, can be a better fit. Advisers who spot this build trust.
• It is not a substitute for proper PA or life cover. ₹15 lakh is a floor, not a recommendation. For a working owner with dependants it is a starting point for a conversation about personal accident, term insurance and an accidental death benefit rider.
• Claims need the right documents. A CPA claim needs the motor policy, FIR or police report, post-mortem report for death, disability certificates for injury and the driving licence of the owner-driver. Families often do not know the cover exists, so claim teams and agents should check for CPA whenever they hear of a fatal or serious motor accident involving a customer.
• Long-term policies. With three and five year third party policies for new vehicles, check whether CPA was bought for the full term or one year at a time, and remind the customer when it ends.