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ICICI Lombard Expert Blog

Notification Issued by Road Ministry to Change Motor Vehicle Act

May 30 2018

A notification issued by the road ministry on May 22nd, 2018 has been met with a strong response from the public. The notification states that the compensation payable for death in a road accident will be ₹5 lakh. According to a senior government official, third-party insurance amount of five lakhs or higher can be claimed by road accident victims, but only after a legal battle.

According to Indian law, there are three ways for a victim to claim insurance amount. The public’s reaction is due to the first way – under the Motor Vehicle (Amendment) Bill, 2016 a victim can claim ₹5 lakh of insurance amount for injuries, and ₹10 lakh in the case of fatal accidents.

The official clarified this was only an “assured” amount – an option given to victims. If the victims aren’t satisfied with this amount, they can go to court. The notification will replace the current insurance limits under the Bill and will come into effect once it is passed by the Rajya Sabha.

Since insurance companies can rightfully reject the victim’s claim on the grounds of negligence, they can take the case to court. With the amount now being ₹5 lakh, the expectation is that insurance companies will agree to pay the amount without a legal battle and 80 per cent of cases will be solved without going to court.

The notification has also amended the formula used to calculate insurance amount for permanent disability caused by road accidents. Under “no fault liability”, they can claim up to ₹25,000 in case of permanent disablement of the victim and ₹50,000 for death – the second way to claim insurance amount. The third way to claim insurance amount is for both parties to settle it in a tribunal.

*Source: Money Control

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