The Motor Vehicle Act-1988 in India mandates compulsory insurance for all vehicles plying on public roads. This requirement aims to ensure financial safety for vehicle owners and third parties in case of accidents or damages. However, understanding the variation of compulsory insurance can be challenging for many policyholders. Thus, we will demystify compulsory insurance under the Motor Vehicle Act-1988 and highlight its importance and implications.
Compulsory third-party insurance
Every vehicle owner is legally obligated to have a valid third-party liability insurance policy under the Motor Vehicle Act-1988. This policy provides coverage for any damages, injuries, or losses caused to third parties due to the vehicle owner’s negligence or involvement in an accident.
Key features of compulsory third-party insurance
Third-party coverage
Compulsory third-party insurance covers property damage caused to third-party vehicles or other property. It also covers the liability arising from bodily injury or death of a third party, including pedestrians, passengers, or occupants of other vehicles involved in the accident.
Statutory requirement
Failure to comply with statutory requirements can lead to penalties, including fines and suspension of vehicle registration. The possession of a valid third-party liability insurance policy is a legal requirement for all vehicles registered under the Motor Vehicle Act-1988.
No-fault coverage
Compulsory insurance follows a “no-fault” principle, which means that compensation is provided to third parties regardless of who is at fault in the accident. This ensures that victims receive timely financial support, irrespective of the outcome of legal proceedings or fault determination.
Coverage limits
The Motor Vehicle Act-1988 specifies the minimum coverage limits for third-party liability insurance. These limits differ depending on the type and capacity of the vehicle.
Certificate of Insurance
Vehicle owners receive a certificate of insurance as proof of their valid third-party liability insurance. This certificate must be carried in the vehicle at all times and produced when requested by law enforcement authorities. Failure to produce a valid certificate can result in penalties.
Exclusions
Damages or injuries caused intentionally, driving under the influence of alcohol or drugs or involvement in illegal activities are certainly excluded from compulsory insurance.
Benefits of compulsory insurance
Financial protection
Essential financial protection is provided to vehicle owners by covering their legal liabilities towards third parties. Kotak General Insurance bears the financial burden of compensating the injured parties or repairing the damaged property, thus protecting the vehicle owner’s assets in the event of an accident.
Legal compliance
Vehicle owners fulfill their legal obligations as mandated by the Motor Vehicle Act-1988 by having valid compulsory insurance, which includes both car and bike insurance. Compliance with the law not only avoids penalties but also upholds the principles of responsible vehicle ownership. Having comprehensive coverage for both cars and bikes ensures financial protection in case of accidents or unforeseen events, promoting a safer and more secure road environment for everyone.
Considerations and additional coverage
It is important to note that it primarily covers third-party liabilities and does not provide coverage for damages or injuries sustained by the vehicle owner or their vehicle while compulsory insurance provides a basic level of financial safety.
Conclusion
Compulsory insurance under the Motor Vehicle Act-1988 is an important requirement for all vehicle owners in India. Complying with this legal requirement will not only fulfill vehicle owner’s obligations but also contribute to a safer and more responsible driving culture.
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