Amendment Proposed For Third Party Liability Cap On Vehicle Accidents

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In order to cap the third party liability, one of the amendment proposed in the Motor Vehicles (MV) Act is to provide Rs 10 lakh in accident cases. As of now, the liability is unlimited and not capped at any particular amount.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

The new proposal is being welcomed as "a friendly one for policyholders", the general insurance industry thinks it might not translate to lower premiums at least in the short term. The non-life insurance company have been indicating the unlimited liability provision and has been asking for aregular upward revision in third-party premiums.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

Since there is a cap on the liability, it's natural to think of reduction of the premiums; however, that remains uncertain as of now.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

R. Chandrasekaran, Secretary General, General Insurance Council, said that it is early to foresee a reduction in premiums. He said they have been seeing the maximum limit proposed in the Bill is much higher than the average claims for injuries and death being paid by the industry.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

Also, there is any clarity on how the court would perceive it. He went on to say that the impact of capping the liability will be felt only after a couple years when the court will decide on the when the claims initiated on the policy post the amendment.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

Chandrasekaran said, the rates will stabilise, narrow the band range and be affordable by all over a period time.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

The claims are usually volatile and uncertain which will be minimised if not fully eliminated.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

The amendment proposed also states that the third party liability premiums will be fixed by the central government.

Amendment Proposed For Third Party Liability Of Motor Vehicles Act

Interestingly, ever since the insurance sector was opened up, the premiums for therange of risk covers have gone down except for the motor and health insurance policies.

Read more on: #auto news
Story first published: Monday, October 10, 2016, 12:13 [IST]
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