Passenger liability coverage raised

Family members of every passenger who dies or gets permanently disabled during road accidents will be entitled to compensation of Rs 500,000 beginning July 16, according to the Insurance Board (IB), which has made passenger liability coverage mandatory for vehicle owners. Currently, passengers who get killed or permanently disabled while travelling in four-wheelers, like cars and public buses, are entitled to compensation of Rs 100,000 each. Also, coverage for medical expenses has been raised to Rs 300,000 per passenger from the existing Rs 100,000. “The coverage amount was raised because the existing compensation is very low, while road accidents are going up,” IB Director Shreeman Karki said, adding, “Compensation will be extended based on the number of seats in a vehicle.” With the rise in coverage amount, premium rate for passenger insurance coverage has also gone up. Until now, vehicle owners were paying a premium of Rs 150 per year to provide a cover of Rs 100,000 to each passenger. Now, vehicle owners will have to pay a premium of Rs 700 per year. IB, the insurance sector regulator, had unveiled the revised Motor Insurance Premium Directive on Friday, which allows owners of two-wheelers to insulate themselves with insurance coverage of over Rs 6.6 million by paying a premium of Rs 1,500 per year starting July 16. The premium amount would provide coverage of Rs 500,000 each to two-wheeler driver and a pillion rider in case of loss of life or permanent disability during a road accident, according to the IB. The revised premium rate has also enabled two-wheeler driver and a pillion rider to seek for compensation of up to Rs 300,000 each to cover medical expenses. Each of them can also hire a medical helper at the cost of Rs 500 per day for up to 45 days. Insurance companies can, however, deny to extend these payments if policyholders were found to be driving under influence or if accidents were premeditated. Currently, the driver of a two-wheeler and a pillion rider are entitled to compensation of Rs 100,000 each in case of death or permanent disability. If they are hospitalised, the driver and pillion rider cannot claim more than Rs 5,000 each for the medical expenses. To purchase the new insurance policies, owners of two-wheelers with engine capacity of less than 150cc will have to pay annual premium of Rs 1,500, excluding taxes. For owners of two-wheelers with engine capacity of 150cc to 250cc, the annual premium has been fixed at Rs 1,700 (excluding taxes), while owners of two-wheelers with engine capacity of over 250cc have to deposit premium of Rs 1,900 (excluding taxes) per year. These premium rates will come into effect from the beginning of the next fiscal year, or July 16. IB has informed all 17 non-life insurance companies in the country about the latest changes and instructed them to work accordingly. Source:The Himalayan Times