The Insurance Regulatory and Development Authority of India (IRDAI) has issued a significant directive that affects private car insurance policies. In a move aimed at providing enhanced protection for employees traveling in their employer’s private vehicles, the IRDAI has mandated the inclusion of IMT-29 coverage as an inbuilt feature in private car insurance policies. Let’s delve into the details of this directive and understand its implications.
Background
The context for this directive lies within the Indian Motor Tariff 2002 (Motor Tariff), specifically under Clause 7 of Section 2. This clause addresses a specific scenario wherein a private car owned by an employer is used to transport employees and is involved in an accident. The existing Clause 7 of Section 2 of the Motor Tariff deals with the “Legal Liability to employees of the insured traveling in and/or driving the employer’s vehicle.”
Under this clause, liability to employees of the insured, while traveling in or driving the employer’s motor vehicle (including or excluding a paid driver), may be covered by paying an additional premium of Rs. 50 per employee. The premium is calculated based on the total number of such employees carried, including the paid driver if applicable, but not exceeding the maximum licensed seating capacity of the vehicle. This additional premium of Rs. 50 per employee applies regardless of any insurance period, provided it does not exceed 12 months.
The Madras High Court Directive
The IRDAI’s decision to make IMT-29 coverage compulsory stems from a directive issued by the Hon’ble Madras High Court. The court’s directive, arising from a case (CMA No. 2166 of 2019 & CMP No. 8871 of 2019 – United India Insurance Co. Ltd. Vs Ilakkiyamathi & others), addresses a critical issue. In cases where employees traveling in their employer’s private vehicles are involved in accidents, claiming compensation from the employer can be a challenging process. This situation can lead to the claimants enduring significant hardship, especially when they have lost their primary breadwinner or have suffered injuries.
To address this issue and ensure better protection for employees, the Hon’ble Madras High Court directed the IRDAI to make IMT-29 coverage mandatory as an inbuilt feature when issuing a private car policy for such vehicles.
IRDAI’s Directive
In accordance with the Madras High Court’s directions, the IRDAI, exercising its authority under Section 14(2) of the Insurance Act 1938, has issued the following directives:
(i) Inclusion of IMT-29 Coverage: All general insurers involved in motor insurance business are now required to provide coverage to employees traveling in their employer’s vehicle, including paid drivers if applicable, under IMT-29 of the Indian Motor Tariff. This coverage is to be included as an inbuilt feature when issuing private car policies for such vehicles.
(ii) Compulsory Inbuilt Coverage: The compulsory IMT-29 coverage should be provided as an inbuilt feature under the Compulsory Motor Third Party Liability Section of Private Car Package/Bundled Policies and under standalone policies that insure Compulsory Motor Third Party Liability.
(iii) No Additional Premium: Importantly, the IRDAI directive specifies that no additional premium shall be charged for this coverage until further directions are issued. This move aims to facilitate the easy implementation of the new mandate.
In conclusion, the IRDAI’s decision to make IMT-29 coverage mandatory in private car policies is a significant step toward ensuring the protection and well-being of employees who travel in their employer’s private vehicles. This directive simplifies the insurance process and eases the burden on accident victims and their families by providing more straightforward access to compensation when accidents occur. It represents a positive development in the realm of motor insurance, aligning policies with the evolving needs and concerns of the Indian workforce.
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Insurance Regulatory and Development Authority of India
Ref No. IRDAI/NL/CIR/MOTOR/178/10/2023-24 Dated: 18th October, 2023
ALL GENERAL INSURERS (OTHER THAN STAND-ALONE HEALTH INSURERS AND SPECIALISED INSURERS)
Subject: Mandating of coverage, payment of premium under IMT-29 compulsory as an inbuilt coverage in a private car policy
Indian Motor Tariff 2002 (“Motor Tariff”) under Clause 7 of Section 2 provides for a specific situation wherein a private car owned by an employer, and used to carry employees, is involved an accident. At present, Clause 7 of Section 2 of Motor Tariff reads as follows:
Clause (7)(ii) of IMT: Legal Liability to employees of the insured travelling in and / or driving the employer’s vehicle
Liability to the employees of the insured travelling in or driving the employer’s motor vehicle, either excluding or including paid driver may be covered on payment of additional premium @ Rs. 50/- per employee, the premium being chargeable on the total number of such employee’s carried (including paid driver, if applicable) but not exceeding the maximum licensed seating capacity of the vehicle. The additional premium of Rs. 50/- per employee is net irrespective of any period of insurance not exceeding 12 months
In this connection, Hon’ble Madras High Court, in CMA No. 2166 of 2019 & CMP No. 8871 of 2019 (United India Insurance Co. Ltd., Vs Ilakkiyamathi & others) observed that
in cases of employees travelling in the private vehicles of the employers, met with an accident and got injured or faced untimely death, it becomes a nightmare for the claimants to recover compensation from the employer. This leads to claimants to suffer endlessly having lost their sole breadwinner or having suffered injuries.
Consequently, the Hon’ble Madras High Court has issued directions to IRDAI to make IMT-29 compulsory as an inbuilt coverage for employees while issuing a Private Car policy for such vehicles.
In accordance with the above directions of the Hon’ble Madras High Court, the Authority, in exercise of the powers conferred by Section 14(2) of Insurance Act 1938, hereby issues the following directions:
(i) All General Insurers carrying on motor insurance business shall provide the cover to the employees travelling in employer’s vehicle (including paid driver, if applicable) under IMT-29 of the Indian Motor Tariff, compulsorily as an inbuilt coverage while issuing private car policy for such vehicles.
(ii) The compulsory cover of IMT-29 shall be provided as an inbuilt coverage under the Compulsory Motor Third Party Liability Section of Private Car Package/ Bundled Policies and under standalone policies insuring Compulsory Motor Third Party Liability.
(iii) No additional premium shall be charged until further directions. This is issued with the approval of the Competent Authority.
-Sd/-
Randip Singh Jagpal
Executive Director (Non-Life)
