Driving an uninsured car or motorcycle may cost you dear, if proposals in the new Road Transport & Safety Bill are passed by the Parliament without changes. General insurance companies, on the other hand, will be smiling all the way to the bank.
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 will have to cough up 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 a fine of Rs 1,000 for all vehicles under the law currently in place.
Bill Will Replace Motors Vehicles Act
The draft version of the Bill, which was put on the ministry’s website on September 13, seeking feedback from the public, has largely attracted attention because it has proposed stringent penalties for traffic offences such as drunken driving and an accident in which a child is killed.
However, the fines for driving uninsured vehicles are also many times existing levels and could drive up insurance penetration manifold if the final version is similar to the draft one. “This (the enhanced penalties) will increase penetration of motor insurance,” said Vijay Kumar head of motor insurance Bajaj Allianz General Insurance. The Bill will replace the Motors Vehicles Act, 1988.
Although insuring any automobile plying on the road is mandatory, many people violate the rule. A study by New India Assurance Ltd, state-run general insurer, has shown that nearly 70% of motorcy cles 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. “More than the extent of fine, it is the ability not to drive that would be important for insurance companies,” said Sanjay Datta, head of motor insurance at ICICI Lombard. “If the rules say that a three motorcytime offender will lose his licence, it will bring discipline.”
To promote insurance penetration among automobile users, the Insurance Regulatory & Development Authority is easing its rules. It has allowed longer tenure policies – these include a three-year policy for twowheelers as well as third-party insurance. Long term products for car insurance are also in the works. 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