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New Road Transport & Safety Bill seeks to fine owners for uninsured vehicles

October 06, 2014, 03:42 PM IST by Fleme Varkey
New Road Transport & Safety Bill seeks to fine owners for uninsured vehicles


In what can be seen as an important measure to reduce fraudulent practices with regards to motor vehicle insurance, the proposed Road Transport & Safety Bill seeks to fine owners with uninsured vehicles , both two-wheelers and four-wheelers.   

This Bill, if passed without any changes will mean that General Insurance Companies will be seeing quite an increase in their coffers. If a motorcyclist is caught riding without an insurance policy, the penalty will be Rs 10,000 while owners of light motor vehicles and autorickshaws may have to pay Rs 25,000. For any car or a truck driver caught driving without an insurance policy, the penalty is as high as Rs 75,000. This compares to the Rs 1,000 fine for all vehicles currently in place. This new bill is expected to replace the Motors Vehicles Act, 1988.

The Bill seeks to make changes and add stricter penalties for traffic offences such as drunken driving and an accident in which a child is killed. The increased fine should not be a surprise as insuring any automobile plying on the road is mandatory, a rule that is blatantly violated by many. A study by New India Assurance Ltd has shown that nearly 70 per cent of motorcycles and scooters on the road are not insured. About a third of the cars and trucks are uninsured as well. Insurance company officials say that penalties should go beyond fines and include loss of licence for repeated violations.

The Insurance Regulatory & Development Authority is easing its rules as well.  It has allowed longer tenure policies - these include a three-year policy for two-wheelers as well as third-party insurance. Insurance companies have suggested to the government that third party liability should be limited to Rs 10 lakh. So far, liability for motor vehicles is unlimited while it is capped at Rs 5 lakh for aircraft and Rs 2 lakh for railways.

The industry also wants the claim allowed under two jurisdictions— one, where the accident has happened and the other where the vehicle is registered. Also, the claim has to be filed within three years of the accident taking place. The Bill has proposed setting up a motor accident fund to help grievously injured people and compensate legal representatives of a victim.

This move by the government though might seem a costly affair for the public is a good tool to reduce the fraudulent practices and the lack of insurance. If these rules are followed properly it will ultimately benefit the user. 

Tags:Vehicle insurance,Road Transport & Safety Bill
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