Now Get Higher Compensation for Third-Party Motor Claims

Introduction

Motor accidents are unfortunately a common occurrence on the roads, leading to injuries, disabilities, and even fatalities. In order to provide adequate compensation to the victims, the Indian government has recently amended the compensation amounts payable for third-party motor claims. This article will delve into the details of these amendments, discussing the new compensation rates and their implications for motor insurance premiums.

The Amendments to the Motor Vehicle Act

The Motor Vehicle Act of 1988 has been amended to revise the compensation amounts payable for third-party fatal accidents and injury claims. These amendments aim to ensure that the compensation provided is in line with the current cost of living. The changes came into effect on May 22, 2018, and apply to all third-party claims filed on or after this date.

Compensation for Death

Under the amended act, the compensation amount payable in case of death has been increased to Rs five lakh. This means that if a motor accident results in the death of a third party, the responsible party will be liable to pay a compensation amount of Rs five lakh to the victim’s family.

Compensation for Permanent Disability

In cases where the accident results in permanent disability, the compensation amount will be determined based on the percentage disability as per schedule I of the Employee’s Compensation Act, 1923. The formula for calculating the compensation amount is as follows:

Compensation amount = Rs 5 lakh X percentage disability

The minimum compensation in case of any kind of permanent disability has been set at Rs 50,000.

Compensation for Minor Injuries

For accidents resulting in minor injuries, the compensation amount has been fixed at Rs 25,000. This includes injuries that do not result in permanent disability but still require medical attention and treatment.

Annual Increment in Compensation

To account for the rising cost of living, the amended act also stipulates that the compensation amounts will increase by five percent annually for all types of compensations. This annual increment will come into effect from January 1, 2019. For example, the compensation amount payable in case of death will increase to Rs 5,25,000 from January 1, 2019.

Impact on Motor Insurance Premiums

One of the concerns raised by policyholders is whether the increase in compensation amounts will lead to a rise in motor insurance premiums. However, experts suggest that the impact on premiums may not be significant.

According to Tarun Mathur, Chief Business Officer at Policybazaar.com, the annual increase of five percent in compensation and the higher minimum payouts for death and total disability are unlikely to have a direct impact on overall motor insurance premiums. This is because third-party insurance premiums are determined annually by the insurance regulator based on past claims experience.

Mathur explains that the increase in compensation amounts will actually expedite the settlement of smaller claims, saving time and effort for both the insured and the insurer. However, in the case of larger claims, the impact will be minimal, and the process will continue as before. Additionally, the government needs to clarify whether the annual increment in compensation amounts will be based on the base amount or the amount increased in the previous year.

Overall, while the amendments to the compensation amounts are aimed at providing fair and adequate compensation to motor accident victims, they are not expected to significantly affect motor insurance premiums.

Conclusion

The recent amendments to the Motor Vehicle Act have increased the compensation amounts payable for third-party motor claims in cases of death, permanent disability, and minor injuries. These changes aim to ensure that victims and their families are adequately compensated for the losses and damages suffered. While the increase in compensation amounts may not directly impact motor insurance premiums, it is important for policyholders to stay informed about these amendments and understand their rights and obligations under the revised act.

By keeping up with the latest regulations and having a comprehensive motor insurance policy in place, individuals can ensure that they are protected financially in the event of a motor accident. It is always advisable to consult with insurance professionals and compare different policies to find the one that best suits their needs and offers sufficient coverage.