Motor Accident Policy in India
The Indian law requires you to get a car insurance when you get a vehicle. This is in Chapter 11 of The Motor Vehicles Act 1988 (the Act). It is a basic insurance policy which protects you and others in the event of an accident. The law requires you to get an insurance policy which will protect you and others involved against death/bodily injury and/or third party's property being damaged. This basic cover compensates just Rs.6000 when it comes to third party's property being damaged.
Penal Liability in Car Insurance:
It is a penal offence (Sec.196) to drive/cause/allow to the driving of an uninsured vehicle. Breaking this law, according to the Motor Accident Claims Tribunal (the MACT) can mean imprisonment for three months as well as a motor accident claims. The consequences can be more than the above mentioned, depending on the facts and circumstances of the accident. Additional to the compensation that the owner/driver will have to pay to the injured third party, they could also be liable for criminal prosecution under the Act and others (eg. the Indian Penal Code (IPC) 1860). Such a prosecution could lead to extended imprisonment and/or fines.
Statutory Obligations of the Insurance Company Towards Third Party on Behalf of the Insured:
The insurer has an obligation towards the third party (Sec.149) to satisfy verdicts (according to what the MACT has judged). Apart from that, they must issue a certificate of insurance in favour of the insured. The only exception is discussed below. According to Sec.149(2)(b) discusses this exception where the Insurer does not have to pay the third party/parties. This exception is only possible if there is proof that is gathered by the insured through non-disclosure of material fact or representation of fact false in material particular. This includes particulars and facts that would influence the judgment of an insurer in deciding whether to assume the risk and on what conditions.
Limited Statutory Defenses:
Some of the ground rules according to (sec.149(2)(a) of the Act) in order to do away with strict obligations are:
- Hiring and use of the vehicle and reward while the permit does not cover it, and also conflicting to such stated policy situation.
- If the vehicle is not used for the purpose that is against the policy condition.
- If the driver of the vehicle does not have a license or was disqualified from having one etc.
GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017
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