There has been a sudden rise in the population of motor vehicles and motor accidents in the last few years. Much of these are attributable to increase in the number of vehicles. Every vehicle before being driven on roads has to be compulsorily insured. The motor insurance policy represents a combined coverage of the vehicles including accessories, loss or damage to person's property or life and the third party coverage. Persons driving vehicles may cause losses and injuries to other persons. Every individual who owns a motor vehicle is also exposed to certain other risks. These include damage to his vehicle due to accidents, theft, fire, collision and natural disasters and also injuries to himself. In 1939, Motor Vehicle Act came into force in India. Compulsory insurance was introduced by Motor Vehicle Act to protect the pedestrians and other third parties. Claims for damages may arise due to possession of car, usage and maintenance of car. Motor insurance policy will pay the financial liability arising out of these risks to the insured person.
[...] To bring about a turnaround in the motor insurance sector the Tariff Advisory Committee (TAC) will soon be revising the pricing structure. Changes such as bringing down the bonus amount offered on no claim bonus, as also a cap of Rs 7.5 lakh on third party liability will happen among others once these are approved. Besides the third party premium will be upped significantly. Also if the policyholder plans to change his insurer he may not have to produce a receipt of renewal notice and proof of no claim bonus from the existing insurer. [...]
[...] Act 1988 as any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding 25 cubic centimeters MEANING OF MOTOR VEHICLE INSURANCE Motor Vehicle insurance is insurance which consumers can purchase for cars, trucks, and other vehicles. [...]
[...] The Motor Insurance business in India as on date is governed by Tariff guidelines under the India Motor Tariff which means that individual insurers could not change both the terms and conditions of the motor policies and the premiums. In a detariffed scenario, the insurer can decide the premium, but without a change in the existing terms and conditions on the coverage. While Insurers will be able to apply risk based pricing on the Own Damage section of the policy, the Third Party insurance rates would continue to be governed by IRDA. [...]
[...] Legal Necessity for Third Party Insurance: Section 146 of the Motor Vehicles Act provides that no person shall use or allow any other person to use a motor vehicle in public place, unless the vehicle is covered by the policy of insurance complying with the requirements of the Act. Section 147 of the Motor Vehicles Act 1988 requires that the policy must provide cover--- 1. Against any liability which may be incurred by the insured in respect of death or bodily injury to any person 2. [...]
[...] In order to act as an incentive for encouraging voluntary insurance, there should be discounts for motor vehicle owners who also obtain other forms of insurance like Householders' Package policy, Additional Personal Accident coverage etc. e. Third party liability cover alone should be discouraged and whenever there is a claim under such a policy, it should be adequately loaded. When the insurer is required to pay a third party claim perforce, even when there is no legal liability, it should be recovered from the Motor car owner as if it is a revenue due and there should be provision for criminally prosecuting the owner in the absence of such payment. [...]
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