Curious to know why third party insurance is mandatory in India? With the ever-growing demand for vehicles in our country, the risk of car accidents has increased exponentially. It is important to ensure broad insurance coverage to address legal implications as well.
Over the years, India has recorded multiple cases of road accidents on a daily basis, leading to undue property damage, vehicular damage, injuries and deaths. Over-speeding, driving under the influence, rash driving, or a blatant disregard for rules are some of the common reasons behind vehicular accidents. Sadly, we are all well acquainted with road accidents, from being a witness to being an affected individual in any capacity.
Driving without a valid insurance cover also has legal implications. Driving without insurance can incur a fine of INR 2000, and/or imprisonment of 3 months. However, if you are found driving without insurance for the second time, you can incur a fine of 4000 INR, and/or imprisonment up to 3 months.
What is Third-Party Insurance?
Apart from it being a mandate, insurance is highly beneficial for all vehicle owners. It protects you against multiple repercussions, like repair bills, medical bills, legal liabilities, death etc.
According to IRDAI, third-party property damages are covered up to a sum of INR 7.5 lakh. However, if the damage incurred is beyond the specified limit, the insured party shall have to bear the additional cost. In the case of death or injury, the compensation is determined by the court and is highly subjective.
A third-party insurance aids you against losses/injuries/damages caused to other individuals or their property (even Govt. property). It is beneficial for you, as a policyholder as well as the affected party.
What is the benefit of having Third-Party Insurance?
The most important benefit of having a third-party insurance in India is that it enables you to meet your legal and financial obligations.
Suppose an accident takes place and your insured car causes grave injuries to a third party or leads to their death, having a third-party car insurance will shield you from financial losses that arise from any damage claims filed by the third party or their family.
One of the most important benefits of having third-party insurance is that you have peace of mind, knowing that the situation can be addressed adequately. It gives your loved ones also a sense of safety, which is equally important.
Now consider another scenario where you also opt for a personal accident cover with the car insurance policy for third party damages. In such a case, you will also be protected from bodily injuries that are caused to you.
By having third-party insurance, you can reduce your financial stress point and the legal implications that come with it.
Why is Third-Party Insurance essential in India?
In 2022 alone, 1,55,622 accident-related deaths have been recorded in India, with 59.7 per cent of fatalities linked to over-speeding. The Ministry of Road Transport and Highways rolled out its report ‘Road accidents in India – 2021’ , which stated that around 1,28,825 accidents occurred on the national highways and this includes expressways. Around 96,382 accidents took place on state highways and 1,87,225 on other roads. The age group of 18-45 years has been pegged as the worst affected by car accidents, accounting for nearly 67% of deaths.
Considering the rising number of road accident fatalities, the Government of India brought forth the Motor Vehicle Act in 1988, which was later amended in 2019. This Act is a consolidated set of rules governing all elements of road transport vehicles drafted to safeguard the citizens. It specifies everything you need to know about traffic rules, do’s and don’ts and the necessary paperwork required to operate your vehicle on Indian roads. The Act specifically enforces every vehicle owner to have insurance for their vehicle. Though every individual can choose a policy according to their requirement, owning a third-party (also known as ‘act-only’/’liability cover’) insurance however is a basic mandate.
The Ministry of Law & Justice drafted the Motor Vehicle Act to define an order for traffic rules and regulations in India and over time, this Act has been amended, considering the changes in population, increasing number of vehicles and the subsequent increase in accidents. It is our individual responsibility to comply with the rules and drive safely, not only for ourselves but others too.
Conclusion
Be it a residential area or a highway, everyone is prone to accidents on the road, but we can curb our losses by being safe and insured. With third-party insurance, you can go on worry-free car drives and minimise any vehicle repair expenses.
