22 Sep 2018

Uninsured vehicle owners should pay accident-compensation else vehicle to be auctioned: SC

If you are driving an uninsured vehicle, you could end up losing it. The Supreme Court, in a recent judgement, has asked all the states in the country to ensure that in case of an accident, the owner of an uninsured vehicle is made to pay adequate compensation to the victim's family. 

In the process, the uninsured vehicle may have to be auctioned, if the need arises, and the proceeds be deposited in the claims tribunal to compensate the loss of the victim. 

Even though third-party insurance is a must, there are several vehicles moving on the road without it. If any such uninsured vehicle ends up in an accident, the compensation payable to victim's family becomes an issue.

The new rule
A recent Supreme Court judgement clears the air and sets a new provision in place. The court observes, "Where there is no insurance cover for a vehicle, the owner should be directed to offer security or deposit an amount, adequate to satisfy the award that may be ultimately passed, as a condition precedent for release of the seized vehicle involved in the accident. If such security or cash deposit is not made, within a period of three months, appropriate steps may be taken for disposal of the vehicle and hold the sale proceeds in deposit until the claim case is disposed of."The 3rd party insurance relates to cover the damage done by one's own vehicle to other vehicle or property or life. "The need for this ruling arose based on that fact that every day numerous accidents occur on a road and the party in question may not have an insurance policy or is carrying an expired policy," says Tarun Mathur, Cheif Business Officer- General Insurance,

He adds that currently, there is no such provision for such cases. "The new provision states that the vehicle in question will be seized by the local government for 3 months, if the vehicle owner fails to compensate for the loss then authorities have rights to auction the vehicle," says Tarun Mathur, Chief Business Officer- General Insurance,

The background
The judgment was delivered in a case in which the victim's family demanded compensation when an uninsured vehicle hit the victim that resulted in death. The Motor Vehicle Act Tribunal declined to pay up as the vehicle was uninsured. The judgment has finally made the states to own up in such cases and bear the responsibility. 

The Delhi diktat
The Supreme Court had taken cognizance of the existing Delhi Government's 'Delhi Motor Accident Claims Tribunal Rules, 2008' and has asked all states) to follow it by issuing notifications within 12 weeks of this judgment that was delivered on September 13, 2018. The Supreme Court specifically says that the appropriate (state) governments may consider incorporation of a rule on the lines of Rule 6 of the Delhi Motor Accident Claims Tribunal Rules, 2008.

The Delhi diktat states "no court shall release a motor vehicle involved in an accident resulting in death or bodily injury or damage to property, when such vehicle is against third party risks unless and until the registered owner furnishes sufficient security to the satisfaction of the court to pay compensation that may be awarded in a claim case arising out of such accident." 

Further, it says that the "motor vehicle shall be sold off in a public auction by the magistrate having jurisdiction over the area where accident occurred, on expiry of three months of the vehicle being taken in possession and proceeds shall be deposited with the Claims Tribunal having jurisdiction over the area in question, within 15 days for the purpose of satisfying the compensation that may have been awarded, or may be awarded in a claim case arising out of such accident."

What you should do
While third party cover is mandatory, what remains optional is the 'own damage' portion. It refers to the damage or loss caused to the insured's vehicle due to any of the insured perils defined in the policy. Among other things, it includes loss or damage due to fire, explosion, accidents or while in transit by road or rail, and even burglary and theft. 

Together with 'third party' and the 'own damage' cover, the coverage is referred to as a comprehensive cover. A comprehensive cover insures the vehicle against any risk arising out of theft or damage to the vehicle, death of the driver and/or passengers in the vehicle during an accident, and damage caused by the vehicle to other people or property. One should always go for a comprehensive cover and cover the risk from all fronts.