PERSONAL ACCIDENT INSURANCE
The personal accident insurance pays fixed compensation for death or disablement resulting
from accidental bodily injury. With effect from 1.04.1994 this insurance became a non-tariff f
business, but the policy forms and rating system follow more or less similar approach with
Definitions and meanings of terms:-
If at any time during the currency of this policy, the insured shall sustain any bodily injury
resulting solely and directly from accident caused by external, violent and visible means, then
the 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.
Bodily injury: The use of this term excludes disease from natural causes, but disease
proximately caused by accident, is bodily injury (Unless specifically excluded by the Policy).
Mental shock, fright or grief, unless causing some physical injury or disease, does not come
within the scope of bodily injury, but the modem tendency is towards the inclusion of any
disablement caused by shock.
Solely and directly: The effect of this phrase is to require that the bodily injury shall have
been caused solely and directly by an accident; in turn, the bodily injury must directly and
independently of any other cause result in death or disablement; hence if any other cause
contributes to the result, the insured event has not occurred.
An accident may set up a disease and result in death, but death may still be the direct result of
the accident, namely, where there is no break in the chain of causation, e. g. a man is thrown
from his horse while hunting and so injured that he cannot walk, he lies on the wet ground
until he is picked up, he thus catches chill which turns to pneumonia and he dies.
However if a man breaks a leg and taken to hospital where he contracts an infectious disease
from another patient, with fatal results, the death is not the sole and direct result of the
accident; the infectious disease constitutes a break in the chain of causation.
Accident: An accident is an event which is wholly unexpected, not intended or designed. It
does not include the cumulative result of a series of small incidents. Thus, a bent hand, the
result of using a pneumatic drill, is not caused by accident.
Certain voluntary acts which result in bodily injury, are included, where the insured's act is
the result of a chain of events stemming from an accident. For example, an insured who is
injured whilst jumping from an upper storey of a burning building, sustains injury by
Questions often arise whether events like suicide, murder, frostbite, snakebite, drowning etc.
can be regarded as accident. Applying the various tests, it can be stated that whilst suicide
and murder or homicide following grave provocation are not accidents, homicide or murder
without provocation, frostbite, snakebite and drowning are accidents.
External, violent and visible means: The cause of accident i.e., the means, must be within the
definition as a whole, but the result may not be external. For example, injury may be internal
i.e. inside the body. However the result must be death or disablement as specified in the
policy. In other words, the means or cause of accident must be within the definition, but the
result or effect need not be external or visible, so long as it is bodily injury.
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 inability to attend to any
occupation or business is called disablement. What is referred to here is the physical inability
of the person to attend to occupation / business, and not his earning capacity. A special note
may be taken of the fact that, although there may not be any loss of earning capacity, there
still can be disablement under the policy.
Types of Disablement
The following are the types of disablement covered under the policy
(i) Permanent total disablement;
(ii) Permanent partial disablement; and
(iii) Temporary total disablement;
Permanent total disablement : Here, disablement is of permanent and irrecoverable nature
and is absolutely total, in the sense that the insured person is prevented from engaging in
gainful employment of any kind. (Example: Paralysis)
It must be noted that loss of sight of both eyes or the actual loss by physical separation of the
two entire hands or two entire feet or one entire hand and one entire foot or loss of sight of
one eye and such loss of one entire hand I foot are deemed as equivalent to permanent total'
The exact meaning of the phrases 'loss of sight' and' loss of limbs' should be understood. The
loss of sight has to be total and irrecoverable; Claims are admissible if vision has become so
impaired that it is impossible to recognize object although the difference between darkness
and light can be distinguished.
"Loss of Limbs" means loss of hand and/or foot i.e. physical separation of the hand and/or
foot at or above the wrist or ankle. Loss of use of limbs concerned and not the limbs
themselves is also deemed to be 'loss of limbs' .
Permanent partial disablement: This is similar to permanent total disablement with the
difference that, the disablement is not total but is only partial. An example is the loss of a toe
or a finger. The applicable percentage of compensation for various losses is shown in the
policy by a table. This percentage of capital sum insured will become payable. For permanent
partial disablement not specified in the table, doctor's assessment would be the basis.
For example, the table specifies that for loss of little finger, compensation is 4% of capital
sum insured, loss of four fingers 35%, loss of hearing both ears 75% and so on.
Temporary total disablement: As the name implies, this is a disablement which is total (i.e.
the insured person is prevented from engaging in any occupation or business) but for a
temporary period only. This temporary period may be days, weeks, months or even years.
The position of the person in supervisory capacity who can sign business documents,
although confined to bed, is not easy to define, but the signing of papers only does not
usually invalidate a claim for total disablement.
Applicability of Basic Principles
Utmost Good Faith
The principle of utmost good faith applies to P.A. and Mediclaim Policies in the same
manner and with the same force as it applies to other classes of insurance, except that onus on
the insured of disclosing all relevant facts is stricter in this class of insurance as compared to
other classes. The duty of disclosure also arises during the currency of the policy. For
example, personal accident policies include a condition whereby the Insured shall give
immediate notice of any change in his occupation.
The policies issued in this class of insurance are not strictly contracts of indemnity. This is so
because life is invaluable and no amount of money can compensate the death or disablement
of a human being. A majority of policies issued in this class are issued as 'benefit' policies as
distinct from policies of indemnity. This means that in the event of happening of an insured
event a specified sum of money is payable irrespective of the amount of pecuniary loss
actually suffered by the insured or dependents, which in any case can not be measured.
This should not lead one to believe that by taking policies of this class for larger amounts, it
is easy for the insured to make profit because the insurers seek to ensure that even under
these policies the-principle of indemnity is not fully lost. For example, if a person earning
Rs.5000/- per month were to approach an insurer with a personal accident insurance proposal
for Rs.5,OO,OOO/-, there is no likelihood of the proposal being accepted for that amount.
though it is difficult to specify the exact amount for which the cover could be granted.
Linking the capital sum insured to the earnings of the person also ensures that the weekly
benefits provided to the insured in the event of temporary disablement would not be dispro-
portionate to his weekly earnings.
This formula is sometimes not strictly applied if the policy is taken for Capital Sums only.
The medical expenses extension cover however unlike the basic Personal Accident Insurance
cover, is subject to strict principle of indemnity in all circumstances, since this relates to
reimbursement of expenses actually incurred subject to limits in the policy.
Contribution does not apply where the contract is not one of indemnity. An insured person
may hold several personal accident policies and is entitled to the full benefits of each.
However the weekly compensation payable as temporary total disablement benefit is limited
to Rs.3000/- per week overall irrespective of the total sum insured. If policies are issued by
different companies and the total sum insured exceeds Rs.3 lacs in respect of T.T.D. benefit
liability of each company would be proportionate to the respective sum insured.
In respect of medical expenses extension too there could arise co-sharing of liability among
the insurance policies issued by different companies. This would happen when the expenses
incurred are for an amount less than the total cover available. When the expenses incurred are
more each policy will bear to the extent of its own limit of liability.
Although the insured can have more than one policy, insurers place restrictions on additional
insurances to prevent over insurance. There is a question in the proposal form seeking
information about any other existing P.A policies. A condition may also be incorporated in
the policy to ensure that additional policies are not taken without the consent of the insurer.
Subrogation like contribution does not apply to contracts which are not of strict indemnity.
A person is deemed to have an unlimited interest in his own life and as such, this principle
does not pose any problem in personal accident insurance policies.
Since a husband has an insurable interest in the life of his wife and vice versa it is in order for
a husband to take a personal accident insurance policy on the life of his wife and vice versa.
Insurable interest also arises for a creditor in his debtor's life to the extent of the debt due to
The employers are deemed to have an insurable interest in the lives of their employees in so
far as they would suffer in a pecuniary sense by the death or disablement of their employees.
Very often, group policies are taken by employer on the lives of their employees, although
there is no provision for such benefits in their service conditions, but as a welfare measure. In
such cases claims paid to the insured employers, are passed on by them, to the concerned
employees or their dependants, as the case be.
Basic Coverage and Benefit Chart
A specimen table of benefits showing the amounts of compensation payable in the event of
various contingencies is given below for understanding. It is assumed that the capital sum
insured by the policy is Rs.1,00,000/-. (This amount is selected for the purpose of illustration
only.) The proposer is free to choose any capital sum insured subject to the same being
commensurate with his income through gainful employment.
--- - --- -
~ - - -~Contingency Amount of Compensation payable
a) Death Rs.1,00,000 (i.e. 100% of capital sum insured)
b) Loss of two limbs or
both eyes or one limb
and one eye. Rs.1,00,000 (i.e. 100% of capital sum insured)
c) Loss of one limb or one
eye Rs.50,000 (i.e. 50% of capital sum insured)
d) Permanent total disable
ment other than the
above (e.g.) paralysis
due to an accident) 100% of capital sum insured
e) Permanent partial
disablement Percentage as shown in the table in the policy.
f) Temporary Total
disablement Weekly payment of Rs.l,000/- (i.e. One percent
of the capital sum insured) subject to a
maximum of 100 weeks
The amount of weekly payment is restricted to
a maximum sum of Rs.3000/-) whatever be the
capital sum insured. This limit applies to all
policies held by the insured
benefits (a), (b), (c), (d) and (e) above are referred to as capital benefits, and benefit (f) as
(Note: It is not necessary that all benefits stated above are to be covered. On underwriting
consideration or at the request of the insured, policies may be issued covering all the above
benefits or the benefits (a) to (d) or (a) to (e) or only benefit (a).)
Additional Benefits at no Extra Premium
Carriage of dead body
Expenses incurred for carriage of dead body of insured (death due to accident only) to place
of residence are reimbursed subject to 2% percent of Capital Sum Insured or Rs. 2500/-
whichever is less.
In the event of death or permanent total disablement of the insured person, the policy
provides for Education Fund for the dependent children, in addition to Capital Sum Insured
and is applicable to Personal Accident Individual Policy only. Compensation is provided as
1.If the insured person has one dependent child below the age of 25 years, 10% of the Capital
Sum insured subject to maximum of Rs.5,000/-
2.If the insured person has more than 1 dependent child below 25 years, 10% of the Capital
Sum Insured subject to maximum of Rs. 10,000/-)
The benefit is available only on Capital Sum Insured and not on Cumulative Bonus. If there
are existing insurances on the same life then the total compensation payable shall be limited
to maximum of Rs.5000/- for one child and Rs.10000/- for more than one child.
Compensation payable for death, loss of limb(s) or sight and Permanent Total Disablement
arising out of accidental injuries shall be increased by 5% thereof in respect of each
completed year, during which the policy shall have been in force prior to the occurrence of an
accident for which capital sum becomes payable but amount of such increase shall not exceed
50% of the capital sum insured.
This clause shall not in any way alter the annual character of the Insurance nor the right of the
Company to decline to renew or to cancel this Policy.
The earned Cumulative Bonus will not be lost if the policy is renewed within 30 days after its
The following appear as provisos in the policy. The insurer is not liable for:-
(a) Compensation under more than one of the sub-clauses (a to f of benefit chart above) in
respect of the same period of disablement.
Comprehensive policy provides for payment of compensation for several contingencies like
death, loss of limbs/eyes, permanent partial disability etc. It may so happen that the insured
may initially appear as only partially disabled, but this disablement may later lead to total
disablement, loss of limbs / eyes or death.
Without restriction as above it is possible that the insured may claim several items for the
same accident. It is therefore clarified that payment can be only under one item for the same
period of disablement.
(b) Any payment after a claim under sub clauses (a), (b), (c) or (d) of the policy has been
admitted and settled.
Once a claim is settled under one of the sub-clauses referred to above the policy becomes
inoperative. No further claim can be admitted under the policy.
(c) Any payment in case of more than one claim under the policy by which maximum
liability of the company would exceed sum payable under sub-clause (a) (the capital sum
The object of this exclusion is to clarify beyond any doubt that the company's liability under
the policy is limited to the amount of the capital sum insured (-+ cumulative bonus, if
(d) Payment of weekly compensation until the total amount shall have been ascertained
and agreed. Although, the benefit is known as weekly compensation, the payment is generally
made in one lump sum after the quantum of liability is agreed. It is felt that periodical part
payments may encourage a claimant to malinger. In genuine hardship cases however 'on
account' payment is made which is then adjusted against the final payment due.
The exclusions commonly found in Personal Accident policies are as follows:
Payment of compensation 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 drugs
(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.
(viii)War and kindred peril and nuclear risks.
(i) Suicide is not an accident. Besides it is an offence under the Indian Penal Code and the
insured is not allowed to benefit from his own criminal act. But when the circumstances are
such that the evidence is equally consistent with either suicide or accident, then the
presumption of law against suicide applies and accident will be presumed.
(ii) Claims arising out of liquor or drugs, venereal diseases, breach of law with criminal intent
are not payable on grounds of public policy. The words 'criminal intent' are important.
Technical breaches of law are not excluded (e.g. Traffic Offences)
(iii) Aviation or ballooning present abnormal risks. (Cover may be arranged at extra premium
on merits of each case).