CPA, Compulsory Personal Accident insurance is the new mandate as per the insurance regulator, IRDAI (Insurance Regulatory Authority of India). All the vehicles should be covered by a motor insurance plan as per the Motor Vehicles Act, 1988. It is an offense to ride a bike without a valid driving license and a valid insurance policy. With the compulsory personal accident insurance, the insurance premium will increase. It will also deliver higher coverage which is beneficial to the bike owner.
What is CPA?
When you buy a package insurance policy or a comprehensive insurance policy, it will cover three kinds of risk factors.
- Own damage
- Third-party cover
- CPA (Compulsory Personal Accident)
CPA was introduced in 2002 after the revision of motor tariffs.
The motor tariff is mandatory if it is registered under the name of an individual.
- CPA tariff is included under the third-party premium component. The maximum compensation with the default CPA for vehicle owners was Rs. 1 lakh. If the bike owner dies in the accident, the beneficiary will get Rs. 1 lakh on claiming the policy.
- Vehicle owners can subscribe to add-ons so that the coverage can be increased up to Rs. 10 lakh. However, it was an optional exercise. Hence, most of the bike owners ignored the options add-on on the pretense of minimizing the insurance premium.
- There will be a great loss for vehicle owners if they met with the risk. The dependents will suffer great loss. Hence, the insurance regulator has introduced a new clause so that all the vehicle owners (including bikes and cars) will get a minimum coverage of Rs. 15 lakh without fail through the new CPA rules.
Personal accident coverage
- All the vehicles which are being registered from September 1, 2018 should be covered by CPA.
- Before the introduction of new rules, the maximum personal accident coverage was Rs. 1 lakh per two-wheelers and Rs. 2 lakh for cars.
- As per the new mandate was given by the insurance regulator, there will be a great benefit to vehicle owners.
- Earlier, the maximum coverage for two-wheelers was Rs. 1 lakh for bike owner. However, for third-parties, the coverage was applicable up to Rs. 15 lakh.
- This kind of disparity was removed with the judgment given by the Madras High Court recently.
Importance of personal accident cover
- There is great importance for personal accident cover. The vehicle owner should take steps to buy the personal accident cover.
- Fatal incidents will take place while traveling on highways and city roads. Even though you are a skillful rider, there is no guarantee that you will not go through the unfortunate event.
- The accident due to the involvement of the third-party may lead to injury or death.
- There are different levels of payment which will be decided by the insurance company.
- The insurance company will extend the cover to overcome partial or full disability.
Hence, you should buy bike insurance to protect your life or disability in a very efficient manner.
Application of the CPA
You should understand the terms and conditions for the application of CPA.
- It is available when you get on the vehicle
- It is available when you get off the vehicle
- It is available when you are on the vehicle
- The policyholder should have a valid driving license
Now, you can understand that the coverage is not applicable on a 24/7 basis.
Higher personal accident coverage
- New vehicles should be a policy with minimum personal accident coverage of Rs. 15 lakh per annum.
- Policyholders can subscribe to additional coverage by paying an extra premium. It is possible to get an insurance cover up to Rs. 50 lakh per annum.
- If you go for the highest cover, the insurance premium will be as high as 0.05% of the sum assured. It is equivalent to the amount directed by the insurance regulator.
Bike insurance policies
As per the new regulation, you should be covered by a minimum of Rs. 15 lakh as CPA. Whether you are purchasing a new policy or going for bike insurance renewal, you are compelled to purchase a minimum CPA cover of Rs. 15 lakh.
- Third-party insurance policy
- Package policy
Third-party insurance policy
- The insurance policy offers a basic level of protection
- There will be protection from legal liability to the insured
- If the third party suffers injury, disability or death, the insurance company will pay the compensation
- It is the cheapest policy available in the market
- There will not be coverage for the policyholder’s vehicle
- The personal accident cover was a maximum of Rs. 1 lakh
- With the introduction of new rules, the minimum personal accident cover will be Rs. 15 lakh
- The CPA is included in the third-party insurance policy and it cannot be avoided
- The insured can opt for higher CPA by paying an extra premium
- The insurance company facilitates in buying higher CPA by offering various options to the customer
- A third-party insurance policy is offered by all the vehicle insurance companies
- You can renew a third-party policy on or before the expiry date
- If you own an old bike or car, you can buy a third-party insurance policy
- As per the new mandate, you should buy a third-party cover for at least 3 years. If you are buying a new bike or car, you will want to include the first three years’ CPA premium as well in the insurance premium.
Package policy
- The coverage with package policy is higher than the coverage applicable to the third-party policy
- When you buy a comprehensive or package policy, your vehicle is protected from various kinds of risk factors
- The policy will cover the third-party risk as well as own damage
- The CPA is mandatory for package policy as well
- If you buy a new vehicle after September 1 2018, you should pay the premium for CAP for the first 3 years
- The CPA will give a minimum protection of Rs. 15 lakh which is mandatory. The insurance premium will be Rs. 750 per annum.
- A customer can buy additional coverage by paying an extra premium
- The comprehensive insurance policy will give protection from theft, vandalism, and various kinds of manmade and natural disasters
- A wide range of add-ons can be subscribed as per the needs of the customer
- There will be many options for customers and the policy can be customized as per her/his needs
- A package policy will come with a built-in third party protection. Hence, all the risk factors that are covered under the mandatory third-party policy are covered by the package policy as well
- The premium payable for the package policy is higher than the third-party policy. It is the most expensive policy when you choose wide range of risk factors
Implementation of CPA
- All the insurance companies are compelled to offer CPA to all kinds of subscribers.
- Third-party insurance policyholders as well as package policyholders should buy a minimum cover of Rs 15 lakh
- Higher premium can be paid to get higher coverage
- Every insurance company will offer options for customers to choose the best coverage as per their needs
Benefits of new stipulations
- With the implementation of new stipulations, vehicle owners will be able to subscribe to the maximum insurance protection without any issues.
- The minimum protection will be Rs. 15 lakh
- Before the implementation of the new regulation, the maximum compensation for bike owners was Rs. 1 lakh and maximum compensation for car owners was Rs. 2 lakh.
- Now, all types of vehicle owners, from the smallest engine to the largest engine will be covered by a minimum of Rs. 15 lakh.
- It is possible to subscribe a maximum cover of Rs. 50 lakh to fulfill your needs.
- There is no choice in buying the minimum cover of Rs. 15 lakh. You are required to pay Rs. 750 per annum to get the CPA cover.
- In case of accidental death or disability, the beneficiary or policyholder will get the financial benefit.
- The insurance company will collect higher premium as per the needs of the customer and it is able to offer a compensation to fulfill the financial needs of dependents
Before buying a bike or car insurance policy, you should assess your requirements very carefully. The assessment should be done while renewing your policy as well. In addition to CPA premium, you will want to pay the premium to cover various risk factors.
Conclusion
With the inclusion of revised CPA, the insurance policy will be expensive. However, the coverage is many times enhanced and it is equal to the amount paid to the third-party. Now, the policyholder as well as third-party will be covered by at least Rs. 15 lakh coverage. The new measure implemented by IRDA will be beneficial to vehicle owners even though it is heavy for their pockets.
