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Third Party claims under Motor Insurance

 

                               

There are two sections within a comprehensive motor policy-own damage section and third-party section (3rd Part Section).

Own Damage section is voluntary insurance based on the Insured Declared Value (IDV) opted by the insured while 3rd Party section is compulsory under the provisions of the Motor Vehicles Act 1988 (MV Act).  

While own damage section takes care of damage to the motor vehicle due to accidents, Act of God perils, etc., the third-party section covers third party property damages and bodily injuries.            

Details of third-party cover in motor insurance:

Third party cover: Third-party insurance, is called as ‘Act Only’ insurance as it is a statutory requirement for all vehicle owners as per the Motor Vehicle Act. This policy covers accident, loss of life and damage to the third-party vehicle due to accident.

Section 146 of the Motor Vehicles Act makes it compulsory for the owners of vehicles to get their vehicles insured against third party risks. Third party means an unknown party who can be affected by the operation of the insured vehicle. Third party includes the opposite party plying vehicles on the road. Vehicle owners are liable to compensate for the loss of life or damages to the property, including vehicle of a third party if the policyholder’s vehicle causes the accident. Damage to own vehicle is not covered under this policy.

What does third party insurance cover?

This policy covers any accident where the insured shall become legally liable to pay in respect of:

 a. Death of or bodily injury to any person including occupants carried in the insured vehicle.

 b. Damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured.

If the vehicle of ‘A’ hits or collides with another vehicle then ‘A’ is liable to pay for the damages caused to another vehicle due to the operation of his vehicle. In short, the policy that ‘A’ has taken will pay for the damages or injuries caused to the opposite vehicle or persons.

Claim process

Motor claims have to be supported by appropriate documents of the claim. The claim form must be immediately submitted to the insurance company by the aggrieved party following which the claim is made on the insurance company which has insured the vehicle that caused the accident.

Accident must be reported to the nearest police station and one should take pictures of the accident scene and file the complaint.

Based on the complaint police shall register an FIR, investigate and then charge-sheet the accused. The policy number of the offending vehicle is noted and the insurance company that has insured the offending vehicle is notified. The case needs to be filed under Motor Accidents Claims Tribunal (MACT). MACT’s are quasi judicial authorities which operate under each state.

The legal process of appropriate compensation for the victim is decided by the MACT. The commissioner for MACT will hear both the sides and pass an award taking into the account the age, income and dependency factor of the victim / deceased.

These claims that are filed in MACT can be settled out of court through Lok Adalats. Here both parties agree to an amount as compensation and the claim is settled. This process eases the claim settlement and the relief is quicker compared to the time-consuming process of courts.

Who can claim compensation in motor accident cases?

Claim for compensation can be made by:

1.     By the person who has sustained the injury.

2.     By the owner of the property where death has resulted from the motor accident.

3.     By all or any of the legal representatives of the deceased.

4.     By any agent duly authorized by the person injured or all or any of the legal representatives of the deceased, as the case may be.

Where can compensation be claimed?

Claim Petition can be filed –

·       to the Claims Tribunal having jurisdiction over the area in which the accident occurred or,

·       to the Claims Tribunal within the local limits of whose jurisdiction the claimant resides, or carries on business or,

·       within the local limits of whose jurisdiction the defendant resides. Insurer is also a party to the Claims case. 

Other modes of immediate relief to victims

No fault liability: Motor Vehicles Act imposes no fault liability on the owner of the motor vehicle. Section 140 of the Act lays down the principle of “no fault liability”. According to this principle the liability of paying compensation is imposed on the owner of the motor vehicles even if no fault exists in relation to the accident.

This method of compensation provides immediate relief to the victims of accidents who have died or were permanently disabled due to the accident.

The compensation to be paid in case of no-fault liability is:

·       Rs 50000 in case of Death.

·       Rs 25000 in case of permanent disablement.

Hit and run motor accident: Hit and Run motor accidents has been defined in Section 161(1)(b) of the Motor Vehicles Act.   “Hit and run motor accident” means an accident arising out of the use of a motor vehicle or motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts for the purpose.

One of the essential elements of a “hit and run motor accident” is that the vehicle which caused the accident is untraceable. Upon the vehicle been certified to be untraceable by the police the compensation is released.

Solatium fund was created by the government for the victims of hit and run motor accident.

The amount of compensation is-

·        Rs 200000 in case of death

·        Rs 50000 in case of grievous hurt

 

Structured formula basis: Section 163 A of the Motor Vehicles Act deals with special provisions as to payment of compensation on structured formula basis.

The owner of the vehicle shall be liable to pay in case of death and permanent disability caused because of accident by the motor vehicle of the owner.

The claimant who is seeking compensation in case of death or permanent disability caused by motor vehicle, is not required to plead or establish that the death or permanent disablement was due to any wrongful act or neglect or default of the owner of the vehicle.

Compensation is paid as per formula based on the age, earning capacity of the victim / deceased.

The benefit in this type of compensation is one can avoid lengthy court proceedings, delay in receipt of relief due, etc., However once payment is made under structured formula basis, claim is closed between both parties. No further claim will be entertained.

Where a person is entitled to claim compensation under section 140 and section 163-A, he shall file the claim under either of the said sections and not under both.

 

Third-party insurance does not provide any compensation, if:

·        The accident was caused due to drunken driving

·        The driver is under aged or was found guilty of driving without a valid driving license

·        The accident was a deliberate act

·        The vehicle was used for any commercial purposes or illegal activities

·        The vehicle is a stolen one

In these cases, the recourse to victims of accidents shall be through appropriate civil proceedings against the opposite party. 

 

We at Zen Insurance assist in a complete understanding of the various insurance covers offered and help you in the insurance process. Contact us for assistance.

 

Disclaimer:   

Zen Insurance Brokers is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.

  

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