1. Draft Motor Vehicles Bill: Government removes proposed cap on third party motor insurance claims in case of death, injury

Draft Motor Vehicles Bill: Government removes proposed cap on third party motor insurance claims in case of death, injury

The government has removed the proposed cap on third-party motor insurance claims in case of death or injury

By: | New Delhi | Published: April 11, 2017 7:00 AM
Currently, victims have to go first to the claims tribunal, which makes an award. (Representative Image: Reuters)

The government has removed the proposed cap on third-party motor insurance claims in case of death or injury — though the current law has no such cap, a cap of Rs 10 lakh for death and Rs 5 lakh for grievous injuries was proposed in the draft Motor Vehicles (Amendment) Bill. Under what is now proposed, a victim/kin can straightaway approach insurance firms for cash compensation of Rs 5 lakh in case of death and Rs 2.5 lakh in case of injuries. If not satisfied, they can subsequently approach the motor accident claims tribunal for a higher amount.

Currently, victims have to go first to the claims tribunal, which makes an award. Insurance companies have been demanding the capping of claims as over the years they have been rising, making third-party mandatory motor insur

ance an unprofitable business.

The Lok Sabha on Monday approved the reworked amendment Bill, which will now go the Rajya Sabha for approval before it becomes an Act. Analysts said that the approved version of the Bill would provide relief to accident victims as currently it takes five to six years to get an award from the tribunal.

The Motor Vehicles (Amendment) Bill, was first introduced in the Lok Sabha on August 9, 2016, as the government wanted to bring about an omnibus reform in Motor Vehicle Act that includes weeding out of issuance of bogus driving licences, slapping heavy penalty for traffic violations and protecting good Samaritans helping accident victims. On average, 5 lakh road accidents in the country claim 1.5 lakh lives every year.

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The Insurance Regulatory and Development Authority of India has allowed insurance firms to increase third-party insurance premium rate by 40-50% from April 1, said Kapil Mehta, co-founder of SecureNow Insurance Broker. This was aimed at providing some sort of cushion to the insurance firms as claims are on the rise.

Motor third-party insurance premiums grew 19% on-year to Rs 21,242 crore in FY16. It typically goes up 10-15% every year to reduce the burden on insurers. As a result, the claims to premium ratio is now 140%, much lower than a few years ago.

  1. V
    VIVEK
    Apr 11, 2017 at 11:24 am
    Is buying vehicle insurance a statutory requirement ? It should not be.I am needlessly buying it since last 8 years.
    Reply

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