Buying New Vehicle? 3rd Party Insurance Is Now Compulsory For All New Vehicles!

In order to mitigate the risk of road accidents, the Supreme Court has now made 3rd party insurance as compulsory for all new vehicles.

How much additional expenses will you have to bear now?

And from when is this new rule applying?

Read on to know more!

Supreme Court: 3rd Party Insurance Now Must For All!

After September 1st, 2018, any new vehicle bought or sold will have mandatory 3rd party insurance. This new rule applies to both two-wheelers and four-wheelers.

This new rule has come out after a verdict by Supreme Court bench headed by Justice MB Lokur and Deepak Gupta. The ruling is based on recommendations of a committee headed by former Supreme Court Judge Justice KS Radhakrishnan, which had strongly suggested for a longer duration of 3rd party insurance.

The Current Law Regarding 3rd Party Insurance

As per current rules, any new vehicle should have 3rd party insurance for one year.

After that, it is upto the vehicle owners to renew or cancel their 3rd party insurance cover.

What Has Changed?

As per the verdict of Supreme Court, now every new 2-wheeler should have 3rd party insurance for 5 years, and every new 4-wheeler should have 3rd party insurance for 3 years.

Without 3 and 5 years 3rd party insurance, no new vehicles can hit the road effective September 1st 2018.

What Is 3rd Party Insurance?

3rd party insurance of any vehicle covers accident victims other than the driver, owner and/or the passengers.

Hence, if a car is involved in an accident, wherein it hits a pedestrian, and he/she is injured. In such case, 3rd party insurance will come into force, and would be used to compensate for the injured pedestrian.

The rule and requirement of 3rd party insurance comes under The Motor Vehicles Act, 1988, wherein there is a provision of awarding Rs 5 lakh (with no upper limit) as an immediate relief in case of fatal road accident under 3rd party insurance.

Compensation under 3rd party insurance are determined and finalized by Motor Accident Claims Tribunal, as mentioned under The Motor Vehicles Act, 1988.

As per various estimates, out of 18 crore vehicles plying on Indian roads,  only 6 crore has third party insurance. More than 1 lakh people die every year, due to road accidents in India.

Do you think that the Supreme Court has made the right decision by enforcing 3rd party insurance? Do let us know by commenting right here!

Image: Pictures of Money via Flickr