IRDAI says general insurers to provide motor cover to employees travelling in employer's vehicle

The Insurance Regulatory and Development Authority of India (IRDAI) has said the general insurers will offer mandatory motor insurance coverage to employees travelling in their employer's vehicles. The new directive was issued after the Madras High Court asked to make India Motor Tariff-29 compulsory as an in-built coverage for employees while issuing a private car policy for such vehicles.

“All general insurers carrying on motor insurance business shall provide the cover to employees travelling in an employer’s vehicle (including paid driver, if applicable) under IMT-29 of the Indian Motor Tariff, compulsorily as an in-built coverage while issuing private car policy for such vehicles,” IRDAI said in a circular.

IRDAI has also said that the compulsory cover of IMT-29 should be provided as an in-built 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.

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What did Madras HC say

The Madras High Court asked IRDAI to make IMT-29 compulsory as an inbuilt coverage for employees while issuing a private car policy for such vehicles.

The High Court had observed that in cases of employees travelling in private vehicles of the employers meeting with an accident resulting in injuries or death, it becomes a nightmare for the claimants to recover compensation from the employer.

This leads claimants to suffer endlessly having lost their sole breadwinner or having suffered injuries, the IRDAI cited in its communication to the insurers.

What did IRDAI say

IRDAI said the Indian Motor Tariff 2002 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 in an accident.

The clause stipulates that the liability of such employees, including the paid driver if applicable, be covered on payment of additional premium at Rs 50 per employee – the number of such people 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.

IRDAI has laid down the following directives for General Insurers engaged in motor insurance:

(i) All General Insurers engaged in the motor insurance business shall provide coverage to employees traveling in the employer’s vehicle (including a paid driver, if applicable) under IMT-29 of the Indian Motor Tariff, compulsorily as an inbuilt coverage when issuing private car policies for such vehicles.

(ii) The compulsory cover of IMT-29 shall be provided as an inbuilt feature 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.

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