Important information on motor vehicle insurance was shared at a seminar, which took place in Nagpur recently. The seminar on the ‘Importance of third party motor vehicle insurance’ was held jointly by the Nagpur RTO and an NGO named Janakrosh at the Regional Transport Office. Additionally, the seminar also hosted industry experts who shed light on details of third party motor vehicle insurance.
The Government of India, under the Motor Vehicle’s Act, has made it mandatory for every vehicle plying on the road to have third party insurance. Unlike comprehensive insurance, third party insurance does not cover own damage, but instead compensates the third party for property damage and even injury or death that may happen because of an accident. However, it does take care of the expenses related to penalties and litigation charges, which are to be borne by the insured. If a vehicle is caught on the roads without third-party insurance, the owner will have to pay a fine of ₹ 1,000 or face imprisonment of up to three months, or both.
Since third-party motor vehicle insurance is mandatory, insurance regulator, Insurance Regulatory and Development Authority of India (IRDAI) has fixed a standardised rate for third party insurance premiums that insurers are not allowed to exceed. This, in turn, brings affordable insurance within the grasp of the common man. The experts also mentioned that if no claim is made, the premiums for the insurance gets cheaper each year as insurance companies give a 5% discount over the previous premium paid.
Despite the emphasis on third-party insurance, most vehicles, especially two wheelers, running on roads are not insured. This is because the showroom/dealer does the insurance when the customer brings the vehicle brand new. This insurance is usually for a year and after that, it is the customer’s responsibility to renew it. Many owners, unfortunately, do not take this, seriously and they do not renew their motor insurance policy in the following year. The flipside to this is the excess burden on the judiciary, which has to deal with the increase in litigation cases arising out of not having third-party insurance.
This will soon become a thing of the past if one of the industry experts is to be believed. He said that the government is considering cancellation of driving licenses and vehicle registrations of those caught without having basic insurance. This move, if it goes through, will help in enforcing vehicle insurance even more.
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Amendments in Motor Vehicles Act to Benefit Insurance Industry
Regulator Formulating New Vehicle Insurance Policies