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ICICI Lombard Expert Blog

Cabinet Passes Bill to Enforce Insurance for Government Vehicles

August 06 2016
Bill to Make Insurance Mandatory for Government Vehicles

The New Motor Vehicle Bill passed by the Cabinet will make it mandatory for government-owned vehicles to buy third party insurance. Presently, only few states like Gujarat and Maharashtra have dedicated insurance funds that cover road accidents caused by government buses.

Roads in Tamil Nadu have more than 20,000 government buses plying, and witness an average of 750-800 accidents in a year. Despite these numbers, Tamil Nadu and other states do not have any form of insurance.

While the bill is likely to result in soaring business for insurance companies, insurance officials say it still too early to determine how the bill will be enforced. They reckon it being modelled along the lines of either the Pradhan Mantri Suraksha Bima Yojana Scheme or the Railway Accident Insurance option that the Indian Railway Catering and Tourism Corporation (IRCTC) has recently proposed.

"The Motor Insurance Act clearly states that all vehicles plying on the road must have insurance. There is no differentiator between private and government vehicles. But state governments have been lax in this regard, and if the Bill states so it will augur well for the industry," said an official from the Insurance Regulatory Development Authority of India (IRDAI).

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