Why insurance is mandatory for motor vehicles?

Motor vehicle insurance has been made mandatory as Common Law provides right to every citizen to conduct in such a manner so that other persons rights are not infringed while using roads where public has access, to their detriment.

If a vehicle is being used in a public place in a careless and negligent manner causing accidental injuries or death to a Third party using road ( the third party is a person out side the vehicle, some persons on vehicle have been mandatory included like passengers using vehicle for hire or reward; driver, conductor, labour necessarily required on vehicle; owner of goods or his representative travelling on goods carrying vehicle ); the person causing injury or property damage of third party will be legally liable to compensate that third party adequately. 

The Motor Vehicle Act 1988; Sec 146 mandates that no person will drive or cause other person to drive a motor vehicle in a public place or a place where public has access on a private property with out a valid third party insurance cover which in India is a unlimited liability cover; so that the third party in case of disability or his legal heirs in case of death are compensated adequately to the extent of the financial status maintained by the deceased in the society.

Driver, cleaner, conductor, labour on vehicle, owner of good or his representative are not third party technically, as they are using vehicle on their own; but law separately provides compensation for them too.

Motor insurance covers legal liability of Registered owner of vehicle by virtue of ‘Certificate of Insurance’ issued by Insurer in compliance to Motor Vehicle Act 1988.

Currently Motor Insurance also covers “No Fault liability” as a humanitarian good will gesture, adjusting the amount so released as interim payment, in final liability compensation awarded by MACT to mitigate immediate need of deceased’s family.

It is estimated that on an average, in one hour, around 55 road accidents occur in our country. What if the cost is too high to be borne by one person? Who will take the responsibility for the damage?

This is where motor insurance comes into the picture. Those who have a valid insurance policy can approach their insurer. The insurer will pay for the damage. However, no one will cover the people who do not buy insurance. And if they cause an accident, they will have to bear the cost from their pocket and their own expenses.

Apart from paying for the damage and medical treatments for injuries, the drivers at fault could face serious legal liabilities. This is exactly why it is a law in India to buy Motor Insurance. Under Chapter 11 (Section 145 to 164) of The Motor Vehicles Act, 1988, it is compulsory to buy at least a Third-party Motor Insurance Policy in India.

Advantages of Buying Motor Insurance

There are two types of Motor insurance policies, Third-party Motor Insurance and Comprehensive Motor Insurance. As mentioned earlier, a third-party policy is compulsory for every motor owner. However, it does not provide adequate coverage to the owners themselves.

Coverage

Depending on the type of coverage, you can get a vehicle insurance online policy which will insure you for damages caused to the third-party and for own damage. Own damage includes cost of treating injuries of owner-driver and cost of repairing damages.

No Claim Bonus

During an active policy year if no claim has been raised, you will be entitled for a No Claim Bonus i.e. a discount on the amount of motor insurance premium.

Peace of Mind

Motor insurance offers complete peace of mind. One does not have to worry about a sudden financial crunch which may occur if the motor is stolen or damaged.

Hope that helps!!