IB mulls raising accident coverage amount to Rs 500,000
KATHMANDU, April 24: The Insurance Board is mulling over raising accident coverage insurance for every person traveling on both public and private vehicles to Rs 500,000 from current Rs 100,000.
The insurance sector regulator is considering raising the coverage amount following rampant exploitation of third-party insurance introduced two years ago.
Third-party insurance, introduced by the Board in September 2009, provides coverage of up to Rs 500,000 in case the insured vehicle causes damage to human lives or properties. In other words, it only covers people other than those in the vehicle and property lying outside of the vehicle. Passengers who are killed or injured while travelling in the vehicle are only entitled to amount of up to Rs 100,000, according to the directive on motor insurance rates of the Insurance Board.
Lately passengers or their kin who were killed or injured in accidents have started demanding compensation of up to Rs 500,000 - equivalent to sum insured under third-party insurance. Many of these people have also started presenting fake documents to corroborate that passengers who were killed or injured in accidents were not passengers but pedestrians who were hit by vehicles.
“This problem has become a headache for most of the insurance companies and is also raising their administrative costs as they have to verify each and every document on third-party claims,” a reliable source of the Insurance Board told Republica.
The only way to control this malpractice, according to the source, is raising coverage amount under passenger accident insurance to Rs 500,000. “Since most of the insurance companies agreed to this, we do not have much problem in introducing the new provision,” the official said.
However, whether this change will raise the premium amount on third-party insurance is not known yet. “Currently, we are asking insurance companies not to raise premium amounts. But even if they have to the amount would be nominal,” the source said.
If the regulator is successful in raising the amount it would mean every person travelling on vehicles, regardless of whether it is private or public, will be covered with an insurance of up to Rs 500,000.
It will also mean those injured can legally demand for a sum of up to Rs 200,000 for medical expenses as under the provision included in the third-party insurance, while those who lose an eye can claim for a sum of up to Rs 250,000.