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No Fault Liability

 

                                 

No fault liability is often heard in insurance policies and as the title suggests, imposes a liability that accrues without one’s fault.

No fault liability means liability of a person even without any negligent act on his part and even if he has taken due care and caution. This term is usually found in motor insurance where compensation for an accident is paid on no fault basis. The driver of a vehicle exercises ample caution while driving yet the inevitable happens and a  third party is injured or dies.

To safeguard from such unforeseen and unexpected accidents, Motor Vehicles Act 1988 has laid down the compensation to be payable for the victims of the accident.

No fault liability, is known as strict liability, compensating victims without having to establish the cause of accident or prove the negligence of the driver of the vehicle.

 

Section 140(1) of the Motor Vehicles Act 1988 states that:

"Where the death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle, the owner of the vehicle shall, or the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section."

 

Important points of no-fault liability

 

·       No fault liability provision is aimed to discourage negligent driving and reckless behavior   by motor vehicle users.

 

·       The MV Act states that even if the victim has contributed   fully or partially to the happening of the accident such negligence is not to be taken into account. Also, the contributory aspect will not reduce the liability of the vehicle owner or the compensation payable for such an accident.

 

·       This compensation is only initial payment and the victim is free to claim further compensation in court based on the gravity of injuries and depravation.

 

·       On approaching the courts for higher compensation, if the courts award lesser compensation than what is paid under no fault liability, the excess payment need not be returned to the insurer.

·       The victim need not prove the negligence of the vehicle owner to claim compensation

·       Compensation is paid by the policy even when the insured vehicle is driven by the representative/relative   of the owner.

 

·       No fault liability also helps to simplify and expedite court decisions.

 

The law enforces the fact that the use/possession   of a motor vehicle is like owning a dangerous animal and hence the injuries caused must be compensated by the user of the vehicle, that is the owner.

No fault liability principle is also applicable in hit & run accident cases

This method of compensation payable is also applicable in the hit and run accidents where the vehicle is hit and the no one knows the identity of the vehicle like registration number etc. of the vehicle that caused the accident. Compensation is immediately released to the victim to take care of emergency expenses.

The provision aims to provide immediate relief to poor citizens who are a sudden victim of rash and negligent driving of the vehicle owner.

Compensation is paid by the policy even when the insured vehicle is driven by the representative/relative   of the owner.

Here too the victim need not prove the negligence of the vehicle owner to claim compensation.

 

 

No Fault Liability principle applicability

The no fault liability is also applicable to Public Liability Insurance Act (1991) policy.

 

No fault liability is also a compulsory compensation method on Public liability Act policy. This policy is mandatory for the owner handling/manufacturing hazardous goods.

Compensation is payable as per structure for death disablement and injuries. The victim is free to approach court for higher compensation.

Social justice and retribution are two important facets of law. Adequately compensating the victim and punishing the wrong doer are essential steps to regulate human errors.

Insurance policies provide the right remedy to the liabilities that come from unforeseen circumstances. Policies suggested above may be obtained at any insurance company at competitive premium rates.

 

We at Zen insurance brokers  assist in choosing the right insurance cover for your requirements. Plan your insurance program wisely and contact us for assistance.

 

Disclaimer:

Zen insurance brokers is an IRDAI registered broker which facilitates quick and adequate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.

 

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