×

Third party insurance premiums to go up

  • The premium for third party insurance for motor vehicles or this component in the comprehensive insurance that you take could increase by at least 10-15% once amendments to the Motor Vehicles Act are passed by both Houses of Parliament.

    Third party insurance accounts for about 30% of the premium of comprehensive insurance. Only third party insurance is mandatory.

    The primary reason for this is the substantial increase in compensation proposed in the amendments for accident victims. From the present Rs 25,000 compensation, it will be increased to Rs 2 lakh in case of death in hit and run cases.

    For grievous injuries, the compensation proposed is Rs 50,000 against the present Rs 12,500. Similarly, there is a provision for payment of compensation up to Rs 10 lakh in road fatalities where the offending vehicle and the owner are identified. In case of grievous injuries, the compensation would be up to Rs 5 lakh.

    As per the proposed amendments, insurance companies will pay the compensation amount within 30 days. "This is the minimum compensation we have proposed and people must get the compensation quickly. But if the family members are not satisfied with this amount, they can approach the tribunal for higher compensation," road transport minister Nitin Gadkari told reporters. He added that the main reason behind coming out with such a proposal was to provide quick relief to the families of those killed or grievously injured in road crashes.

    However, experts in the road transport sector are not impressed. "Why should government get into the business of capping compensation? In the present law, police refer every case to the Motor Accidents Claims Tribunal and the compensation is calculated based on a set formula.

    The government should only bring reforms to ensure that people get justice quickly from the tribunal," said S P Singh of IFTRT, a Delhi-based think tank on transport-related issues.

    He added that there were several cases in the past where victims' families got higher compensation. Singh said the government seemed to be playing into the hands of insurance companies and the transporters' lobby. "Let them make it public what consultations they did with road users before proposing such an amendment," Singh said.

    But ministry sources said they had only put the best possible proposal and all aspects of the bill would be discussed in both Houses of Parliament. They added the penalty for driving a vehicle without insurance would be doubled from the present Rs 1,000 to Rs 2,000 to ensure that every vehicle on the road had insurance. "It's a deterrent fine," said a government official.
     

    OUR TAKE

    This was an expected move by the government. With the increased penalties relating to traffic laws, more ammendments were sure to crop up. While some criticize this step, others fully understand the importance of it.  If premiums do not go up, then the compensations will remain stagnant. This might create added pressure on the government. Therefore, the government had their hands tied and had to make the provisions. It will only benefit the users in the future.


    Visit the Indian Kanoon section of LawRato to learn more on Indian Laws.

Get free legal advice from top lawyers for your specific issue

Popular Lawyers in India

Advocate Arjun Vinod Bobde

  Supreme Court of India , Delhi
 Experience: 16 years


Advocate Wg Cdr Ajit Kakkar (Retd)

  Dwarka , Delhi
 Experience: 17 years


Advocate Prashant Mendiratta

  Lajpat Nagar 4 , Delhi
 Experience: 24 years


Advocate Prabhjit Jauhar

  Connaught Place , Delhi
 Experience: 20 years


View all >>

How it Works

Know how LawRato makes legal advice easier and effortless

Ask a Free Question

Post a question and get free advice from multiple lawyers

Talk to a Lawyer

Easily find and book private consults with top lawyers in India

Get Fee Estimate

Receive multiple quotations for your legal requirement instantly