Why it is mandatory to have a motor accident policy?

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Based on a survey, a number of vehicles on the roads of India do not have a vehicle insurance policy. Following the Government’s Motor Vehicles Act that was passed in 1988, it is mandatory for all vehicles plying on the roads of India to have a motor insurance policy. This is to ensure that if the accident is your fault, then this basic third-party insurance policy will compensate the loss caused to the third party involved in the accident. A comprehensive car insurance policy also has the third-party liability feature and vehicle owners do not need to buy a separate third-party insurance policy if they have availed a comprehensive insurance policy. To ensure vehicle owners do buy an insurance policy, we’ve listed out the consequences as stated by law by the Government of India if the vehicle owner fails to have a valid motor insurance policy following an accident.

Third-party liability and penalty for failure to have one

As already mentioned above, following the enactment of the Motor Vehicles Act, 1988, all vehicles that are registered have to have a valid insurance policy. The basic third-party insurance policy which is cost-friendly and affordable, ensures that the policyholder or vehicle owner is responsible for the damages caused to the vehicle of the third party. With this basic policy, the damages caused to the vehicle of the third party are covered to a certain limit as set by the IRDAI and the remaining expenses have to be covered by the policyholder. Not just vehicle damages, the policy offers coverage for medical treatment for the third party as well.

As highlighted above, driving a vehicle without insurance is a penal offense and if the vehicle owner does meet with an accident with an uninsured vehicle, then he/she is liable to criminal prosecution. Depending on the extent of the damage, the owner of the uninsured vehicle could face a heavy penalty and a sentence of three months imprisonment.

Exemptions

The only exemption for such a penalty is if the vehicle owner can prove that the third party has falsified the details of the accident and is accused of doing nothing wrong. In addition, the vehicle owner can state his defense under the below-listed circumstances:

• If the vehicle of the third party does not have a legal permit or is used for a different purpose apart from what’s mentioned in the permit.
• If the third-party driver does not have a valid license.

While you might have failed to renew your motor insurance policy as you feel it is a burden on your finances, as clearly highlighted above, failure to do so will make you land in a legal soup, whether or not the accident was your fault or not. In addition, having a valid motor insurance policy will ensure that you do not need to spend too much following an accident. A third-party insurance policy as well as a comprehensive insurance policy will have your back covered in such situations.