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Under the Motor Vehicles Act, 1988, vehicle insurance is mandatory for all motor vehicles operating in India. This requirement ensures that compensation is available to victims of road accidents, whether for injury, death, or damage to property.

Key Provisions Related to Insurance Requirements:

1. Compulsory Third-Party Insurance (Section 146)

  • The Act mandates that no vehicle can be driven in a public place without third-party insurance.
  • Third-party insurance provides coverage for:
  • Injury or death of third parties (other road users, pedestrians, etc.).
  • Damage to third-party property.
  • It is a legal requirement, and failure to have valid third-party insurance can lead to penalties.

2. Types of Insurance Policies

a. Third-Party Insurance (Mandatory):

  • Covers only liabilities towards third parties (people other than the owner/driver) in the event of an accident, including bodily injury, death, and damage to property.
  • It does not cover damage to the insured vehicle itself. b. Comprehensive Insurance (Optional):
  • Covers third-party liabilities and also provides coverage for own vehicle damages due to accidents, natural calamities, theft, fire, etc.
  • It is optional but recommended, especially for owners seeking broader coverage.

3. Insurance for Drivers and Passengers

  • Section 147 mandates that insurance policies should cover:
  • The vehicle owner and driver for third-party liabilities.
  • Unnamed passengers in certain categories of vehicles, such as public service vehicles, for compensation in case of injury or death.

4. Scope of Third-Party Insurance

  • Third-party insurance covers:
    • Compensation for bodily injury or death of third parties (e.g., pedestrians, passengers in another vehicle, etc.).
    • Damage to third-party property, with limits set by law (currently capped at ₹7.5 lakhs for property damage under the Motor Vehicles (Amendment) Act, 2019).
  • It does not cover:
    • Injury to the owner or driver of the vehicle.
    • Damage to the insured vehicle itself.
    • Any contractual liability not directly related to third-party damages.

5. Penalty for Non-Compliance (Section 196)

  • Driving a vehicle without valid third-party insurance is a punishable offense.
  • Penalty for driving without insurance:
  • A fine of ₹2,000 for the first offense.
  • A fine of ₹4,000 for subsequent offenses.
  • Additionally, the vehicle can be impounded by the authorities if found uninsured.

6. Certificate of Insurance (Section 147(3))

  • A certificate of insurance must be issued by the insurance company and carried in the vehicle at all times.
  • The certificate must include:
  • The policy number.
  • Details of the insured vehicle.
  • Coverage details, including third-party liability.

7. Settlement of Claims (Section 149)

  • Insurers are legally bound to settle claims for third-party damages, whether for injury, death, or property damage, within a reasonable timeframe.
  • Insurance companies are required to honor claims even if there are disputes regarding the policy, ensuring quick compensation to victims.

8. No-Fault Liability (Section 140)

  • The Act provides for no-fault liability for motor accidents:
  • In the event of death or permanent disablement due to an accident, the owner of the vehicle is liable to pay fixed compensation to the victim or their family without the need to establish fault or negligence.
  • Compensation amounts under this provision are:
    • ₹50,000 for death.
    • ₹25,000 for permanent disablement.
  • This provision ensures quick relief for accident victims and their families.

9. Hit-and-Run Compensation (Section 161)

  • For accidents involving hit-and-run cases, where the driver of the offending vehicle is unknown, the Solatium Scheme under the Motor Vehicles Act provides for compensation:
  • ₹2,00,000 in case of death.
  • ₹50,000 in case of grievous injury.
  • This is funded by a central pool under the Motor Accident Claims Tribunal (MACT).

10. Motor Accident Claims Tribunal (MACT) (Section 165)

  • MACT is a specialized court to handle third-party claims related to motor vehicle accidents.
  • Victims or their representatives can approach MACT to claim compensation for accidents resulting in death, injury, or property damage.
  • MACT has the authority to determine liability and decide the amount of compensation to be awarded.

11. Compulsory Insurance for Public Service Vehicles (Section 146(3))

  • Public transport vehicles, including buses, taxis, and auto-rickshaws, must have third-party insurance to cover passengers, pedestrians, and other third parties in case of an accident.
  • These vehicles must also carry insurance to cover injuries to passengers they are transporting.

12. Insurance in Case of Multiple Vehicles (Section 155)

  • If an accident involves multiple vehicles, each vehicle’s insurer is liable to pay for damages proportional to the liability of each vehicle, as determined by the Motor Accident Claims Tribunal.

13. Liability of Insurer in Case of Unauthorized Driving (Section 149(2))

  • Insurance companies can deny claims if the vehicle is:
  • Driven by a person without a valid driving license.
  • Used for purposes other than those specified in the policy (e.g., private vehicle used for commercial purposes).
  • Engaged in unlawful activities or violations of traffic laws.

However, if third-party compensation is denied by the insurance company, the injured party can still claim compensation through MACT, and the insurer may recover the amount from the vehicle owner later.

Recent Amendments: Motor Vehicles (Amendment) Act, 2019

The Motor Vehicles (Amendment) Act, 2019 has introduced more stringent penalties for non-compliance with insurance provisions and also made it easier for victims of accidents to receive compensation:

  • Higher fines for driving without insurance.
  • Increased compensation for hit-and-run victims.
  • Streamlined procedures for third-party insurance claims, ensuring quicker disbursement of compensation.

Conclusion

The Motor Vehicles Act, 1988 makes insurance mandatory to protect third parties in road accidents and ensure that accident victims are compensated. While third-party insurance is compulsory, vehicle owners are also encouraged to take comprehensive coverage for better protection. The Act mandates strict compliance with insurance requirements, and any lapse can lead to penalties and legal consequences.

Published by Pragyanxetu

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