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Insurance Regulatory and Development Authority of India issues Circular to extend insurance coverage to employees travelling to employers vehicle

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The Insurance and Regulatory Development Authority of India (IRDAI) has by way of a circular mandated that coverage and payment of premium under Indian Motor Tariff – 29 (IMT-29) would be compulsory as an inbuilt coverage in a private car policy and would cover the employees travelling in private vehicles of employers.

The background of this circular emanates from the directions by the Hon’ble Madras High Court in the matter of United India Insurance Co. Ltd., Vs. Ilakkiyamathi & Others (CMA No. 2166 of 2019 & CMP No. 8871 of 2019) wherein the High Court observed as under:

“in cases of employees travelling in the private vehicles of the employers, met with an accident and got injured or faced untimely death, it becomes a nightmare for the claimants to recover compensation from the employer. This leads to claimants to suffer endlessly having lost their sole breadwinner or having suffered injuries.”

The High Court also directed the IRDAI to issue appropriate directions in relation to the above.

Before the issuance of the above directions by the Hon’ble High Court, all general insurers carrying on motor insurance business provided cover to the employees travelling in an employer’s private vehicle (including paid driver, if applicable) under IMT-29 subject to payment of premium of Rs. 50/- per employee whose validity continued till the expiration of 12 months.

However, IRDAI in exercise of the powers conferred by Section 14(2) of Insurance Act 1938 expanded the scope and revoked the mandate of separate payment of premium to avail motor insurance cover by employees travelling in and / or driving the employer’s vehicle. Therefore, coverage to such employees shall be included and be a part of the insurance policy of such vehicle.

This is unquestionably a positive stride towards adopting a more inclusive approach for working professionals, while also taking into consideration the potential challenges that the claimants may encounter when seeking compensation in such unforeseen circumstances.

A copy of the IRDAI Circular Mandating of coverage, payment of premium under IMT-29 compulsory as an inbuilt coverage in a private car policy is enclosed below.

Readers are welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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