Motor Vehicle Insurance (India)

Motor vehicle insurance is the insurance coverage of the risk of third party arising out the use of motor vehicle and also for covering the risk of damage caused to the vehicle. In India the law relating to the motor vehicle insurance is contained in the Motor Vehicles Act, insurance Act etc. Taking insurance policy for coverage of certain risks are made compulsory and coverage for other risks are optional at the instance of the owner. Accordingly, motor vehicle insurance policies can be divided in to two, namely, compulsory insurance policy (Act policy) and comprehensive policy.

Compulsory insurance of motor vehicle or Act liability

A motor vehicle in a public place is potentially a dangerous and lethal instrument. Even when it is without its engine or without petrol, if it is moved down on an incline even un intentionally it can cause considerable damage and human injury. Hence, unlike other properties which may be insured or not at the option of the owner, a motor vehicle is required by law to be insured in respect of the user's liability for death, bodily injury or damage to property of third party. As sometimes the driver of the vehicle is often a person of small means and injured person goes without adequate compensation, insurance of motor vehicle covering the third party risk is made compulsory in India and the Motor Vehicles Act provides that, vehicle should not be used in public place without having insurance policy covering third party risks. Third party risk means risk covered for bodily injury, death and damage of property of third party. Third party means any person except owner or passenger in the private vehicle. So pillion rider of the motor cycle, passengers in private cars, jeeps etc. are not third aprty. However, passengers in public vehicle such as bus. contract carriage vehicle, taxi etc. are also third party.