Personal Accident Insurance

In one line

A personal accident policy pays a fixed sum if the insured dies or is disabled by an accident, and it pays whatever else he may recover from anybody.

In the wording a student can write in an exam: personal accident insurance is a benefit contract, not a contract of indemnity, under which the insurer undertakes to pay stated sums on death or on defined degrees of disablement caused solely and directly by accidental, external, violent and visible means; since the substitution of section 2(6C) of the Insurance Act, 1938 in 2026 it falls within health insurance business, and section 2(11) excludes from life insurance business a contract assuring payment on death by accident only.

Where the class sits in the statute

Section 2(11) excludes it from life insurance business. The definition covers a contract assuring payment on death "except death by accident only", so a standalone personal accident policy is not life business.

Section 2(6C), as substituted by Act 40 of 2025 with effect from 5 February 2026, brings it into health insurance business. That clause now expressly includes the personal accident insurance business of effecting contracts of insurance that provide for payment of money in the event of death, disablement or hospitalisation arising out of an accident, and the travel insurance business.

But a life insurer may write the benefit as a rider. Section 2(11) deems the granting of disability and double or triple indemnity accident benefits to be life insurance business where the contract so provides. So an accidental death benefit rider on a term policy is life business, and the same cover sold on its own is health business.

That is the first thing to say in an answer, because it explains why the same benefit is regulated two different ways depending on how it is packaged.

The nature of the contract

It is a benefit contract and not an indemnity. The insurer promises stated sums on stated events, and pays them in full whatever the insured has recovered elsewhere.

Four consequences follow, and they are the same four as in life insurance. Insurable interest is required at inception only. The full benefit is payable whatever the actual loss. There is no subrogation, so the insurer cannot pursue the person who caused the accident. And there is no contribution, so a person holding three personal accident policies collects under all three.

That last point is the one MU tests. A man run down by a lorry may recover damages from the lorry owner in tort, compensation from the motor insurer under Chapter XI of the Motor Vehicles Act, 1988, employee's compensation under Chapter VII of the Code on Social Security, 2020 if it happened at work, and the full benefit under his personal accident policy. None of those reduces the others, because the accident policy is not an indemnity.