IRDAI enforces mandatory coverage for employees in private car policies

(Representative Image)

The Insurance Regulatory and Development Authority of India (IRDAI), in a move aimed at enhancing the safety and security of employees traveling in private vehicles owned by their employers, released a circular on October 18th that emphasizes the need for additional coverage under private car policies.

In response to directives from the Madras High Court, the IRDAI has introduced changes to the Indian Motor Tariff 2002, making it compulsory for General Insurers to include coverage for employees under IMT-29 (Indian Motor Tariff) as an inbuilt feature within private car insurance policies.

Clause (7)(ii) of IMT-29, titled "Legal Liability to Employees of the Insured Traveling in and/or Driving the Employer's Vehicle," is a provision that addresses the complex issue of liability and compensation in cases where employees, while traveling in their employer's private vehicles, are involved in accidents resulting in deaths or injuries.

The insurance regulator also noted in its circular that recognizing this issue as a pressing concern, the Court issued directives to IRDAI, urging them to make IMT-29 compulsory as an integral part of private car insurance policies for such vehicles.

In response to the Madras High Court's directives, IRDAI, empowered by Section 14(2) of the Insurance Act 1938, 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.

IRDAI also highlighted that prior to these changes, it was often a challenging and painful process for claimants to recover compensation from the employer in such cases, leaving them in a vulnerable position, especially if they had lost their primary breadwinner or suffered severe injuries.