The purpose of personal accident insurance is to pay fixed compensation for death or disablement resulting from accidental bodily injury. The personal accident insurance policy provides that, if at
any time during the currency of this policy, the insured (person who has taken the policy) shall sustain any bodily injury resulting solely and directly accident caused by external violent and visible means, then the insurance company shall pay to the insured or his legal personal representative(s), as
the case may be, the sum or sums set, forth, in the policy, if resulting in specified contingencies such as death, permanent disablement etc.
To under stand the meaning of definitions, we should under stand the bold words mention in the Para above.
a) Bodily injury: Any disease due to accident is known as bodily injury but does not include any disease due to natural cause. Mental shock or grief does not amount to accident unless and until some physical injury is caused. In current scenario it is noticed that due to grief some disablement i.e paralysis is taking place and the same is covered under this policy.
b) Solely & Directly: The bodily injury shall have been caused solely and directly by an accident and the bodily injury must directly and independent of any other cause result in death or disablement.
For eg:
1) A person is thrown from his horse while hunting and so injured that he cannot walk and he lies on the wet ground until he is pick up. He thus catches chill which turns pneumonia and dies. Though he dies because of pneumonia but the actual cause is an accident and it covered under personal accident insurance policy.
2) If a person breaks a leg in an accident and taken to hospital where he contracts an infectious disease from another patient which result in to death and the same is not covered under the personal accident insurance policy.
c) Accident: An accident is an event which is wholly unexpected not intended or designed. For eg: Snake biting, Drowning suicide and unprovoked murder are covered under this policy.
d) External, violent and visible means: The cause of accident i.e. the means must be within the definitions as a whole but the result may not be external. In other words the means or cause of accident must be within the definitions but the result or effect need not be external or visible so long as it is bodily injury e.g. injury may be internal i.e. inside the body but the result must be death
or disablement.
e) Disablement : When a person is prevented by an accidental bodily injury from engaging in any occupation or business he is said to be disabled and his ability to attend to any occupation or business is call disablement.
• FEATURES OF PERSONAL ACCIDENT
1) Offer & Acceptance; It is a prerequisite of any contract. Similarly the person will be insured under personal accident insurance policy after the offer is accepted by the insurance company. Example: A proposal submitted to the insurance company along with premium on 1/1/ 2011 but the insurance company accepted the proposal on 15/1/2011. The risk is covered from 15/1/2011 and any loss prior to this date will not be covered under fire insurance.
2) Payment of premium: An owner must ensure that the premium is paid well in advance so that the risk can be covered. If the payment is made through cheque and it is dishonored then the coverage of risk will not exist. It is as per section 64VB of Insurance Act 1938.(Details under insurance legislation Module).
3) Contract of Indemnity: This principle is not applicable to personal accident policy. This is so because life is invaluable and no amount of money can compensate the death or disablement of a human being. When polices are issued to employer to reimburse under service conditions the amounts of compensation paid by them to their employees or their dependents on the disablement
or the death of their employees i:e the insured are indemnified with the exact amount of compensation paid by them.
4) Utmost good faith: The person must disclose all the relevant information to the insurance than company while insuring himself because none other him knows about his health and other relevant particulars. Any change in profession or occupation during the policy should also be informed to the insurance company. e.g. A person is working in the office in administrative job and took the personal accident policy but later on he becomes pilot then he should inform o the insurance company otherwise the insurance company can refuse the claim in case it arises.
5) Insurable Interest: A person is having an unlimited interest in his own life and as such this feature is valid in this policy. Similarly the wife has unlimited interest in the life of husband and vice versa. The employer has the insurable interest in the life his employees.
6) Period of Insurance: The period of insurance is to be defined in the policy which varies form one year to five years. Some times this policy is issued for specific rail/ road/sea journey.
7) The cover under this policy is for 24 hours and on a worldwide basis. Even if the insured person dies in foreign country due to accident the compensation will be paid in India in Indian rupees up to the sum insured.
8) Claims: To get the compensation under personal accident insurance the legal heirs should inform to the insurance company about the death of the insured and incase of disability the person himself can inform the insurance company.
• COVERAGE’S /COMPENSATION
a) Death: If a person dies due to an accident the risk is covered under the personal accident policy. His legal heirs are entitled to get the sum insured.
b) Disability: Disability can be classified further as follows:
1Permanent Total Disability(PTD)
2Permanent Partial Disability(PPD)
3Temporary Total Disability (TTD)
4Permanent Total Disability: As the name indicates the disablement is of permanent and irrecoverable nature and is absolutely total and the insured is unable to engage in the gainful employment. Under this disability the compensation is equal to the sum insured. Example of PTD:
5Loss of sight of both eyes
6Loss by physical separation of two entire hands or
entire feet
7Loss of one hand and one food
c) Carriage of dead body: The expenses incurred for acarriage of dead body of insured due to accident to place of residence are reimbursed. The reimbursement is somepercentage of the sum insured say 2% of sum insured but maximum Rs 2500/-. This amount will be over & above the sum insured.
d) Education amount for children: Incase of death or permanent disablement of the insured person the insurance company also pays the education for two children if the age is below 25 years of those children.
e) Modification of the house: In case of the permanent disablement of a insured person, he has to modify his house for his free movement the expenditure of such modification will be reimbursed by the insurance company up to certain limit of the sum insured.
• EXCLUSIONS (NOT COVERED UNDER PERSONAL ACCIDENT INSURANCE POLICY)
No compensation is payable in respect of death, injury or disablement of the insured
(i) From intentional self-injury, suicide or attempted suicide.
(ii) Whilst under the influence of intoxicating liquor or drug
(iii) Whilst engaging in Aviation or Ballooning whilst mounting into, dismounting from or traveling in any balloon or aircraft other than as passenger (fare paying or otherwise) in any duly licensed standard type of aircraft anywhere in the world.
(iv) Directly or indirectly caused by venereal diseases or insanity
(v) Arising or resulting from the insured committing any breach of law with criminal intent.
(vi) From service in the armed forces
(vii) Resulting directly or indirectly from child birth or pregnancy.
• PROCEDURE FOR INSURING UNDER PERSONAL ACCIDENT INSURANCE POLICY:
a) Submission of proposal form-. The person who is interested to insure himself under this policy will submit the information in the prescribed proposal form as follows:
i. Personal details i.e., age, height and weight, full description of occupation and average monthly income.
ii. Physical condition
iii. Habits and pastimes
iv. Other or previous insurances
v. Previous accidents or illness
vi. Selection of benefits and sum insured
b) Assessment of the proposal form and premium rate to be quoted Risk Group I: (Lowest Premium rate) Accountants, Doctors, Lawyers, Architects, Consulting
Engineers, Teachers, Bankers, Persons engaged in administration functions. Persons primarily engaged in occupations of similar hazards.
Risk Group II: (Higher Premium rate) Builders, Contractors and Engineers engaged in superintending functions only, Veterinary Doctors, paid drivers of motor cars and light motor vehicles and persons engaged in occupation of similar hazards and not engaged in manual labour. All persons engaged in manual labour (Except those falling under Group III), Cash Carrying Employees, Garage and
Motor Mechanics, Machine Operators, Drivers of trucks or lorries and other heavy vehicles. Professional Athletes, and Sportsmen, Woodworking Machinists and Persons engaged in occupations of similar hazards.
Risk Group III : (Highest Premium Rate) Persons working in underground mines, explosives, magazines, workers involved in electrical installation with high tension supply. Jockeys, Circus Personnel, Persons engaged in activities like racing on wheels or horseback, big game hunting, mountaineering, winter sports, skiing, ice hockey, ballooning, hang gliding, river rafting, polo and persons engaged in occupations/activities of similar hazard.
c) Payment of the premium: Based on the above risk category the person will pay the premium to insurance company to insure himself.
d) Issue of Policy Document: Based on the proposal form and the premium amount is received the policy document is issued which contains the following information
i) Name of the person and address
ii) Age
iii) Occupation
iv) Sum insured
v) Nominee
vi) Policy Conditions
a) Written notice of claims with full particulars. In case of death written notice must, unless reasonable
cause is shown, be so given before internment or cremation, and in any case, within one calendar month after the death
b) In the event of loss of sight or amputation of limbs, written notice thereof must be given within one calendar month after such loss of sight or amputation.
• Miscellaneous features
i) Family Package Cover
(a) Earning Member and Spouse, 100% of the Capital Sum if earning. (Persons Insured) Insured for each.
(b) Spouse (if not earning 50% of the Capital Sum member) whichever is lower Insured or Rs. 1 lakh.
(c) Children (between the age 25% of the Capital Sum and of 5 years and 25 years) Insured or Rs. 50000/- whichever is lower per child.
ii) Extensions
A personal accident policy can be extended by endorsement, on payment of extra premium to cover medical expenses incurred by the insured in connection with the accidental bodily injury, subject to specified limits.
• CLAIM PROCEDURE
a) Intimation: Immediately the intimation to be sent to the insurance company in writing mentioning the nature of loss and the policy number.
b) Claim form: The claim form is designed to elicit information, among other things, on the following :
1 Personal details such as age, occupation, etc.
2Details of accident, nature of injuries, etc.
3Name and address of the attending doctor.
c) Documents: The following documents are sent along with the claim form
1Medical Certificate : to obtain medical opinion on the cause or extent of incapacity or progress towards recovery.
2Medical examiner’s Report – To corroborate medical certificate in doubtful cases, or if other causes are in operation.
3Receipt / Discharge form :- to acknowledge the money and to confirm the finality of the settlement.
4Death Certificate – To give the date and cause of death. Post mortem reports where a post-mortem has been done.