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Insurance Article

Third Party Insurance Could Cost 10-15% More

August 08 2016
Third Party Insurance Could Cost 10-15% More

With proposed amendments to the Motor Vehicles Act, the premium for third party insurance for motor vehicles could increase by at least 10-15%. Third party insurance, which is the only mandatory component of a motor insurance policy, accounts for 30% of the premium.

The main objective behind the proposal is to increase the compensation offered to accident victims and provide timely assistance to them. If passed, the amendment seeks to revise the present compensation of ₹ 25,000 to ₹ 2,00,000 in case of death due to hit-and-run accidents.

For grave injuries, the proposed compensation is ₹ 50,000, as compared to the present compensation of ₹ 12,500. In case of fatal accidents where the offending vehicle and owner have been identified, there is a provision for compensation up to ₹ 10,00,000. Additionally, insurance companies will have to pay the compensation within 30 days.

It is believed that the proposed amendments will bring relief to victims of road crashes and their families by providing quick financial support. The revised act also proposes to double the fine for driving a vehicle without insurance, from the present fine of ₹ 1,000 to ₹ 2,000, to ensure all vehicles on road have insurance.

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