Why it is Compulsory to have Car Insurance in India?

In India, and all over the world, getting your car insured is a compulsory by law, not an option. The Motor Vehicle Act of 1988 makes it mandatory.
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In India, and all over the world, getting your car insured is a compulsory by law, not an option. The Motor Vehicle Act of 1988 makes it mandatory for all vehicle to be covered under an appropriate insurance policy before they can ply on the road. The legal provision which are covered under the Motor Vehicles Act of 1988 include the registration of the vehicle, a valid driver’s licence which must be with the driver at all times and insurance cover which must be taken compulsorily. The minimum requirement in terms of insurance is that a vehicle must at least have a third party legal liability insurance before it can be driven on a public road. A third party legal liability policy will cover the cost of any legal liabilities which may arise if your vehicle has been involved in an accident where a third person has been injured or if any third party’s property has been damaged.

Violation of rules laid down by the Motor Vehicles Act have serious consequences or penalties. Most of us may have experienced these consequences at some point in our adult lives. However, we may not be aware of the full range of penalties which follow the violation of the rules of this Act. These include:

  • Violation of the any provisions of the Motor Vehicle Act could attract a fine of Rs. 1000 and/or could also result in the defaulter’s imprisonment for up to 3 months.
  • Any person found flouting the rules could have their driver’s licence suspended.
  • Following a violation of the law, the defaulter’s vehicle registration could also be suspended.

Benefits of Car Insurance

It is worthy to have car insurance in India considering the number of accidents in the past few years. Considering the scenario, we can look at the benefits of car insurance that includes:

  • The lawsuits, including legal fees if held liable for the damage.
  • Bills of repair due to damage caused in an accident.
  • Damages other than an accident caused by terrorism, earthquake etc.
  • Benefits to the survivors of the deceased

Car Insurance – Scope of Cover

To Cover the Own Damage

There will be no coverage for the car’s own damage if the owner does not have a comprehensive car insurance policy. In case, the car owner bangs in the vehicle due to his fault or accidentally, he will suffer some losses. The car owner will receive the payment for the damages subject to the car insurance cover. Otherwise, in all the cases he will not get any reimbursements. Other than accidental losses, damages of a car may arise due to natural calamities as well. India has witnessed and is prone to many storms, floods, and massive earthquakes, which in turn could result in multiple losses.

To ease off the huge Third-Party Liability

Considering the rise of traffic in nothing flat, there are increased chances of smash and bend. You may overcome your own losses, but what if the third party cannot bear with huge expenses after a loss. Damage caused by your car to the third party is your liability to be paid. It does not matter whether you are able to afford it or not. The third party may suffer from bodily injury or property damage for which you may be held liable. Car Insurance, in this case, will be helpful that will save you from undue liability.

To extend Compensation to the Family of the Deceased

Car insurance is mandatory to help the family of the deceased who might lose their life in a car accident. The compensation under the Motor Tribunals Act was introduced to ease the burden on the families.

Mandatory Car Insurancce – A Deeper Insight

Imagine you have called your close relatives at home for dinner and the best of the dish you cooked was burnt to black. The entire meal was prepared but one of the best items on the list got destroyed. For sure, you will lose it, but you would never want your guests to know.

You will be left with a few choices like manage from whatever is cooked or quickly prepare another dish. But now when the world is digital, and food is just a few minutes away, you would definitely keep yourself fool proof with a fantastic dish. That online delivery food will save you. What occupies your mind was to manage the last-minute hassle and not miss a chance for impression.

Similar can be the situation when you blow up your car (not insured) and find out that the expenses to rectify it are too high. Incapacity to bear the expenses for liability or repair due to insufficient savings encircles you with worry and stress.

Life is a precious gift from God. We need to make it beautiful and safe for our families. One car accident can ruin not only yours but also many other lives. Buying a mandatory car insurance policy is wise and not an obligation. Still, many remain doubtful to buy it without considering its scope of operation.


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