Personal Accident: Occupational Change, Disability Table and Multiple Covers
Mr Rajesh Nair, 41, production supervisor at a Kochi steel fabricator, held a personal accident policy for a capital sum insured of ₹40,00,000, declaring his occupation as "supervisory/administrative - Class I". The annual premium was ₹6,000. For five months before the accident he had actually been working as a welding supervisor (Class III) at an extra ₹18,000 a month, without informing the insurer.
Benefits: permanent total disablement 100% of capital sum insured; permanent partial disablement as per the policy table - "loss of one hand at wrist 50%", "total and irrecoverable loss of sight of one eye 40%", aggregate capped at the capital sum insured; temporary total disablement ₹7,000 a week up to 104 weeks. The occupation clause provides that if, at the time of the accident, the insured is engaged in an occupation more hazardous than declared, the claim "shall be settled on the basis of the premium that would have been charged for that more hazardous occupation". The Class III premium for the same capital sum insured is ₹15,000.
On 14 June 2025 a gas cylinder exploded at the plant. Rajesh's right hand was amputated at the wrist. His left eye has 60% permanent visual impairment, certified as impaired but not totally and irrecoverably lost. He was off work for 14 weeks. His employer's group personal accident policy has already paid ₹10,00,000.
1. How should the disablement be classified and quantified before the occupation clause is applied?
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This is permanent partial disablement, not permanent total disablement. He has lost a limb but retains the capacity to follow some occupation; the policy's own table exists precisely to avoid a total-disablement payout in such a case.
Quantify each element against the table as written:
- Loss of one hand at wrist = 50% of ₹40,00,000 = ₹20,00,000.
- Loss of sight of one eye = the table requires "total and irrecoverable loss of sight". A 60% permanent visual impairment, with sight admittedly not totally lost, does not satisfy the wording. Nil for this element.
- Aggregate = 50% of capital sum insured, within the cap.
The eye element is the trap. Percentage impairment certified by an ophthalmologist is not the test; the policy test is complete and irrecoverable loss of sight in that eye, objectively evidenced. If the certificate had said the eye was blind and the condition irreversible, the 40% would have added, taking the aggregate to 90% (₹36,00,000). TTD is separately payable for the certified 14 weeks of total disablement from following any occupation.
2. Apply the occupation clause and state the final amounts for permanent partial disablement and temporary total disablement.
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The declared class was I at a premium of ₹6,000; the class applicable at the date of accident was III at ₹15,000. The clause converts the policy into cover for the risk actually run, on the premium that would have been charged.
Adjustment factor = 6,000 ÷ 15,000 = 0.40.
- Permanent partial disablement: ₹20,00,000 × 0.40 = ₹8,00,000.
- Temporary total disablement: 14 weeks × ₹7,000 = ₹98,000 × 0.40 = ₹39,200.
The same factor applies to TTD, because the clause speaks of settling "the claim", not merely the capital benefit. The insurer should also regularise the file prospectively: collect the differential premium for the unexpired period at Class III rates and endorse the policy, or cancel it from the date of the occupation change with pro-rata refund if it is unwilling to carry the risk - it cannot simply keep Class I premium and Class III exposure. Note that the ₹18,000 monthly allowance is useful evidence of the date the change took effect, which fixes how much differential premium is due.
3. The employer's group personal accident policy has already paid ₹10,00,000. Does that reduce the insurer's liability, and how should the two claims be coordinated?
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No reduction. Both are benefit (capital) covers, not indemnity covers. Personal accident insurance pays a fixed sum on the happening of a defined event; it does not reimburse a proven loss, so the principle of indemnity, contribution and subrogation have no application. Insureds are free to hold several personal accident policies and to collect under each, up to the limits each policy sets.
The only real constraints are internal to each policy: the aggregate cap on disablement benefits within one policy, and any express "other insurance" clause, which is rare in personal accident business and, where present, is usually limited to medical-expenses extension rather than the capital benefits.
Practical coordination points: disclose the group policy in the claim form so that the group insurer and the individual insurer can each see the full disablement picture and avoid paying inconsistent percentages for the same limb; and keep the medical board's assessment of disability common to both files. If the group policy has a medical-expenses extension, that part is indemnity in nature and the two insurers would share the hospital expense - but the ₹10,00,000 paid here, being a disablement benefit, is untouched.