Compulsory personal accident cover for owner-driver: ₹15 lakh rule and when you can opt out

Every motor insurance policy in India must include compulsory personal accident (CPA) cover for the owner-driver, with a sum insured of ₹15 lakh, unless one of the exemptions applies. It pays a lump sum if the registered owner dies or is permanently disabled in an accident while driving, getting into or out of the insured vehicle. Since January 2019 it can be bought as a separate policy or added on, and you may skip it on a particular policy only if you already have qualifying CPA cover on another vehicle, or a standalone personal accident policy of at least ₹15 lakh, or if you do not hold a valid driving licence. It is a small line on your renewal, but many quotes pre-tick or untick it, which changes the total.

This guide is part of how a car insurance premium is calculated.

Why it exists

The CPA requirement comes from the Motor Vehicles Act framework and the standard motor policy: the third-party section protects other people, and CPA protects the owner who is driving. IRDAI raised the sum insured to ₹15 lakh in 2018 and later allowed it to be bought separately from the vehicle policy, so that people who own several vehicles do not pay for it several times.

What it pays

The standard CPA benefit scale, as in the policy wording, is:

It covers the owner-driver only, not other family members who drive, and only when the owner is driving or travelling in the insured vehicle as owner-driver. It does not pay hospital bills; that needs health insurance or the government's cashless scheme for road accident victims (see third-party accident claims).

When you may opt out at renewal

Insurers will ask you to declare a reason if you remove CPA. The accepted reasons are:

1. You already have CPA cover of ₹15 lakh on another vehicle you own, under a separate policy or as a standalone CPA policy.
2. You hold a separate personal accident policy covering death and permanent total disability of at least ₹15 lakh.
3. You do not hold a valid driving licence (for example, the car is driven only by a family member or a driver).
4. The vehicle is owned by a company or other non-individual, which cannot be an "owner-driver".

If you declare a reason that is not true, the CPA benefit will not be there when it is needed, and the false declaration can complicate other claims.

Worked example: two vehicles, one CPA

Illustrative. A household owns a car and a scooter, both registered to the same person. Illustrative CPA premium on each policy: ₹320 for the car, ₹330 as a one-year standalone CPA.

• Option 1: CPA on both vehicle policies: ₹320 + ₹320 = ₹640 a year, but the cover is still ₹15 lakh per accident in the vehicle being driven.
• Option 2: one standalone CPA policy of ₹15 lakh: ₹330 a year, and drop CPA on both vehicle policies with reason 1.

Check the wording: some standalone CPA policies cover the owner driving any vehicle they own; others cover only named vehicles. If the scooter is registered to a different family member, that person needs their own CPA.

Personal accident cover for passengers and paid drivers

These are separate, optional covers in the TP section:

• Unnamed passengers PA: a lump sum per passenger seat (for example ₹1 lakh or ₹2 lakh each). Useful if you regularly carry family members who do not have their own PA or life cover.
• Legal liability to a paid driver: covers your liability under labour law if a driver you employ is injured or killed. If you employ a full-time driver, add it.
• PA for paid driver: a lump sum benefit for the driver.

A passenger injured in an accident caused by another vehicle can also claim against that vehicle's TP insurer through the Motor Accident Claims Tribunal; PA cover is in addition to that, not instead of it.

Is ₹15 lakh enough?

For most families, no. ₹15 lakh is a minimum, not a recommendation. If you are the main earner, consider a term life policy and a personal accident policy with a higher sum insured, which also cover accidents outside the car. The CPA in your motor policy is best treated as a baseline.

Mistakes to avoid

• Dropping CPA because you "have life insurance". Life insurance does not satisfy the opt-out unless it includes a qualifying PA cover of ₹15 lakh; check the rule your insurer applies.
• Assuming CPA covers whoever is driving. It covers only the owner-driver.
• Forgetting CPA when you renew a standalone OD policy. CPA bought with a new vehicle may run for one year or for the full TP term; check the CPA period on the schedule and renew it separately if it was only for one year.
• Ticking the opt-out on a company-owned car and then claiming for an employee.

When to get advice

If the vehicle is jointly owned, owned by a firm or used by a professional driver, ask the insurer in writing who is covered. For disability claims, keep all medical records; the benefit depends on how disability is assessed under the wording.

Related guides

• Third-party premium rates
• Comprehensive vs third-party vs standalone OD

Frequently asked questions

Is CPA included in third-party only policies?

Yes, CPA applies to liability-only policies as well, subject to the same exemptions.

Does CPA affect my NCB?

A CPA claim does not normally affect the NCB on the own-damage section, but check your policy wording.

Can an owner who does not drive buy CPA?

CPA is tied to a valid driving licence. An owner who does not drive can opt out with that reason and consider a regular personal accident policy instead.

Is CPA paid in addition to a MACT award?

Yes. CPA is a contractual benefit under your own policy, separate from any compensation from another vehicle's insurer.

Sources

• IRDAI — circulars on compulsory personal accident cover for owner-drivers
• Parivahan Sewa — driving licence and registration details
• Council for Insurance Ombudsmen — complaints about PA claims