Vehicle insurance compulsory from 1st September, 2009

The new insurance directive that requires compulsory insurance of vehicles is coming into effect from Tuesday 1st September, 2009, compelling all vehicle owners to operate full insurance coverage, including half a million rupees worth of third party insurance coverage.

The new rule will also allow kin of victims of road accidents to legally claim treatment cost of up to Rs 200,000 and death or permanent disability compensation amount of as much as Rs 500,000 from the vehicle owners.

According to the Department of Transport Management, a total of 850,614 vehicles are plying on the roads throughout the country. They include 19,685 buses, 7,497 mini buses, 40,437 trucks and tankers and 112,300 cars, sports utility vehicles and vans, among others.

“Even the owner of a bike will now have to pay half a million sum as compensation if an accident causes death of a person. Lack of insurance coverage will not work, as it is now duty of all vehicle owners to protect themselves from all forms of losses and liability,” Finance Minister Surendra Pandey said.

The new changes will almost double the insurance cost for the private vehicle owners. For passenger vehicles, the raise will be slightly on a higher side.

“But considering the new compensation amount, which is 10-fold of the existing amount, I believe the burden is within manageable limit,” said Pandey.

The government is enforcing mandatory insurance in the transportation sector with an aim to duly compensate the victims of roads accident and also to prevent unnecessary blockage of highways by the victims´ families.

“Our motive behind raising the death compensation amount to Rs 5 lakh from fifty thousand is to make sure that people get judicious compensation for the loss without having to resort to banda and strike. By making insurance compulsory, we wish to end hooliganism culture forever,” said Pandey.

Despite the enforcement announcement, the government, however, has not developed any mechanism to cross-check whether or not the vehicles plying on the road are covered with insurance. However, the government believes that the huge compensation obligation will compel all to correct their behavior for now. As a long-term solution, the government has made submission of insurance document mandatory for the registration and renewal of vehicles.

Minister Pandey also instructed the Insurance Board to launch aggressive information dissemination campaign so that people do not demand compensation higher than the stipulated amount.

Source:

http://www.myrepublica.com/portal/index.php?action=news_details&news_id=9261