Accident Policies

In one line

An accident produces four different insurance responses at once, and knowing which policy answers which loss is the whole of this chapter.

In the wording a student can write in an exam: the accident policies are the family of covers that respond to bodily injury by accident, and they divide into first party covers, which pay a benefit to the injured person or his nominee regardless of anybody's fault, and third party covers, which pay the injured person because somebody else is legally liable to him; the first party group includes the personal accident policy, now standardised as Saral Suraksha Bima, and the statutory schemes; the third party group includes motor third party, public liability and employer's liability; and a single accident may set off several of them at once.

The division that organises the family

First party accident cover pays because an accident happened. The trigger is bodily injury by accidental, external, violent and visible means, and the policy pays a stated benefit without any inquiry into fault. It is not a contract of indemnity, because the value of a life or a limb cannot be measured, so the sum insured is a benefit and not a valuation.

Third party accident cover pays because somebody is liable. The trigger is the insured's legal liability, the amount is the damages a court would award, and fault is at the centre.

The consequences of the division are four, and they are examinable.

Fault. Irrelevant to the first party cover; decisive in the third party cover.

The measure. A stated benefit against a scale, as against damages assessed by a court.

Contribution. A first party accident policy is not an indemnity, so contribution does not apply and a person may hold ten personal accident policies and recover under all ten. A third party liability policy is an indemnity, so the rateable proportion clause does apply.

Subrogation. Not available on a first party benefit policy, for the same reason. Available on the liability policy.

The first party accident policies

The personal accident policy pays death, permanent total disablement, permanent partial disablement and temporary total disablement benefits, and it is worked in full in Module II with the cases on what an accident is.

Saral Suraksha Bima is the standard version, which every general and standalone health insurer has been required to offer from 1 April 2021.

Its terms are fixed by the Authority. Sum insured from ₹2.5 lakh to ₹1 crore in multiples of ₹50,000. Entry age 18 years minimum and at least 70 years maximum, with dependent children covered from three months to twenty five years. Policy period one year.

Its three base covers are compulsory. Death, one hundred per cent of the sum insured. Permanent total disablement, one hundred per cent. Permanent partial disablement, a percentage fixed by a scale according to the loss.