The Supreme Court recently directed all state governments to frame a rule that ensures adequate payment of compensation to the victim by the owners of uninsured vehicles causing the accident. The apex court has also said that if the need arises, the uninsured vehicle can be sold or auctioned to compensate the victim. Citing Delhi Government’s ‘Delhi Motor Accident Claims Tribunal Rules, 2008’, the court has directed all the state governments to enact the rule within 12 weeks.
Although, it is mandatory to have Third-party Insurance for all the vehicles that ply on the roads, many people still do not buy third-party insurance to save paltry amount. A third-party insurance ensures compensation for the victim in case of an accident. However, in the present scenario it doesn’t allow auctioning or sale of the vehicle for compensation.
You would certainly not want to be in a situation where your vehicle needs to be sold off to compensate the victim. To avoid such a situation, it is important to buy third party insurance for your vehicle at the very least, or ideally a comprehensive insurance.
Third-Party Motor Insurance A Necessity
Third party insurance policy covers your liabilities arising from injury, damages, and death caused to a third party – any party other than you or the insurer – by the use of your vehicle. The Motor Accident Claim Tribunal calculates the compensation to the victim based on income, age, injury, death and so on. You pay a premium towards the third-party policy as per the category of your vehicle, but if the compensation amount is significant then also you need not worry about paying it from your pocket, as insurance company takes care of it.
What Happens If You Don’t Have Third Party Insurance
Driving a vehicle without third party insurance is a punishable offence and attracts fine and/or imprisonment as per the stipulated rule. Once the new rule is implemented, a vehicle without insurance will be auctioned to compensate the victim, and the owner will thus lose the vehicle. Your vehicle registration or the driving license may get suspended too.
Also, a person cannot ascertain the extent of damage that may happen at the time of an accident to the third party. So, third-party insurance protects you from that unknown risk level.
What You Need To Know
Third party insurance protects against injury or death of a person other than the insured himself. The third-party insurance premium doesn’t vary based on the price of the vehicle, but it depends on the class of the vehicle, i.e., two-wheeler, four-wheeler, engine capacity, etc. You can also apply and renew the third-party insurance online. After a recent order by the Supreme Court, it is now mandatory to buy long-term third-party insurance for all new vehicles: five-year covers for two-wheelers and three-year covers for four-wheelers.
If you do not take third party insurance for your vehicle, you will be breaking a law, increasing your own legal liabilities in case of an accident, and will also be at financial risk.
You can also consider buying a comprehensive insurance policy for your vehicle, which not only provides third party insurance, but also provides own-damage protection against accidents, burglary, theft, fire, riots, natural calamities etc.
So, if you want to avoid a situation where your vehicle may get auctioned to recover the compensation amount for the accidental third-party victim, always keep your vehicle’s the third-party insurance up to date.
The writer is CEO, BankBazaar.