Will Motor Vehicle (Amendment) Bill 2016 impact two-wheeler insurance? Here’s what you need to know
Last year, the Insurance Regulatory Development Authority of India (IRDAI) found out that 75% of two-wheelers on the roads were not insured despite being mandatory to have one. The low popularity of two-wheeler insurance means that in the case of any loss or damage to the vehicle or third-party, all the expenses have to be borne by the vehicle owner himself.
The Union cabinet has approved the Motor Vehicle (Amendment) Bill 2016, to uplift the road safety standards in the country. The law in the making deals with some issues, the problem of a small number of subscriptions to car insurance, being one of them. Here are a few changes proposed.
Source: The Economic Times
It is to be noted that the penalty in hit and run cases has been increased from Rs 25,000 to Rs 2 lakh. Also, a special provision has been made for the payment of compensation of up to Rs 10 lakhs in case of road accidents
How will the new motor act impact two-wheeler insurance sector?
The bill not only seeks to ensure the commuter’s safety but also increases the penalty for driving without two-wheeler insurance. This move is likely to popularize two wheeler insurance policies which are way too underrated in India. Also, no differentiation would now be made between private and public vehicles. Hence, it will be compulsory for the government-owned vehicles to buy at least third-party insurance. Further, in the case of vehicle transfer, it is imperative for the owner of the vehicle to inform the insurer within 15 days of the transfer to initiate the process of transferring the insurance policy.
The motive behind high penalties or fines is to encourage safe driving among people. For instance, if you are caught driving without a license, you have to shell out Rs 5000. Similarly, the drunk driving penalty has been raised to Rs 10,000. Also, driving without helmets may lead to a fine of Rs 1000 along with the disqualification of driving license for three months. All these initiatives intend to encourage safe driving which indirectly can lower the insurance premium for bikes and cars too. Safe driving and fewer accidents would naturally translate into lesser claims. As a result, a policyholder has better chances of earning no claim bonus (NCB). NCB or No claim bonus is given to policyholders who haven’t made a single claim in the previous policy tenure.