Personal accident insurance refers to an insurance which offers compensation in case of death, bodily injuries, total/ partial disability or dismemberment resulting from an accident caused by violent, visible and external means. This also includes coverage against terrorism and acts of terrorism How to select the sum insured? It is very difficult to put a value to a human life. Hence the principle of indemnity cannot be applied in this policy. However it becomes necessary to apply some yardstick for fixing the sum insured so that human lives are not overvalued for ulterior motives. Hence the capital sum insured is restricted to 72months income from gainful employment. This means that income from property, shares etc. will not be taken into account. For non working spouse, the sum insured is restricted to 50% of the sum insured of earning spouse subject to a maximum of Rs. 1,00,000/- and for dependent children to 25% of the sum insured of earning parents subject to a maximum of Rs. 50,000/-. In case of Gramin Personal Accident, Student Safety, Raj Rajeshwari, Bhagyashree policies the sum insured is fixed.