Compulsory Insurance of Vehicles in India – Requirements and Penalties

Aditya Pratap is a lawyer practicing in the Bombay High Court. He can be reached at aditya@adityapratap.com

Introduction To Compulsory Insurance of Vehicle in India

In India, it is compulsory to get a car insurance and not discretionary for the holder of the vehicle. The Motor Vehicle Act of 1988 makes it mandatory for all vehicle to be covered under an appropriate insurance policy before they can drive on the road. The legal provision which are covered under the Motor Vehicles Act, 1988 include the-

  • Registration of the vehicle
  • A valid driver’s licence which must be with the driver perpetually
  • Insurance cover which must be taken mandatory. 

Motor Vehicle Act, 1988 on Compulsory Insurance of Vehicle

In India, as per the Motor Vehicles Act, it is mandatory that all vehicles that operate in any public space must have a motor vehicle insurance cover. Policy holders must have at least third party liability motor insurance cover even when opting for the basic insurance plans. The third party cover is essential in the event of an accident caused by the vehicle owner or another person driving the other vehicle. It is important to note that vehicle insurance coverage may or may not cover damages caused by the owner.

The Indian Parliament amended the Motor Vehicles Act of 1988 that reviewed all aspects concerning transport vehicles and was implemented on 1st July 1989. The act lists out the various provisions related to licenses of conductors, licenses of drivers, registration of vehicles, controlling vehicles using permits, traffic rules, liability, offenses, insurance covers, and penalties.

Certificate of Insurance for Motor Vehicle

The Certificate of Insurance is an official certificate which is issued by the insurance company under the provisions of Rule 141 of the Central Motor Vehicle Rules 1989. This certificate must compulsorily is provided by the company, regardless of the type of the insurance policy one is getting renewed or are purchasing. The Certificate of Insurance is a separate document which is provided in addition to your policy document.

Type of Motor Vehicle Insurance 

In India, two types of Motor Vehicle Insurance plans are offered:

  • Third-Party Insurance- Third-party insurance is a basic vehicle insurance As per applicable terms and conditions, it covers bodily injuries or damages or losses caused to any third-party vehicle or property by the insured vehicle.
  • Comprehensive Insurance- The comprehensive vehicle insurance policy provides enhanced insurance coverage. It covers third-party liability as well as own damage to the insured vehicle.

Requirements to buy a Motor Vehicle Insurance

There are two modes of buying motor insurance policy in India:

  • Online Mode- When you buy insurance online, you can easily save your time, and buy insurance from the your home. This is a transparent and time-saving way of buying insurance. Make sure to compare car insurance online and then opt for the plan that fulfills your insurance expectations. Insurance buyers make the best use of advanced technology and buy Motor Insurance policy online.
  • Offline Mode- This is the traditional mode of buying Insurance. If you opt for buying Insurance from agents directly, you will have to meet them in person as per their availability and indulge in a hassle of high commission which can cause inconvenience.

Benefits of Compulsory Insurance of Vehicle

Risk Covers like Insurance is to protect us from unforeseen events and unplanned liabilities. we can look at the benefits of Compulsory Insurance of vehicle that includes:

  • The lawsuits, including legal fees if held liable for the damage.
  • Bills of repair due to damage caused in an accident.
  • Damages other than an accident caused by terrorism, earthquake etc.
  • Benefits to the survivors of the deceased.

Consequences and Penalties for disobeying Compulsory Car Insurance

There are serious consequences on the violation of rules laid down by the Motor Vehicles Act, 1988 on Compulsory Car Insurance.  These include:

  • Violation of the any provisions of the Motor Vehicle Act could attract a fine of Rs. 1000 or could also result in the defaulter’s imprisonment for up to 3 months or both.
  • Any person found scorning the rules could have their driver’s licence suspended.
  • Following a violation of the law, the defaulter’s vehicle registration could also be suspended.

About the Author – Aditya Pratap

Aditya Pratap is a lawyer practising in Mumbai. He argues cases in the Bombay High Court, Sessions and Magistrate Courts, along with appearances before RERA, NCLT and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.

Cases argued by Aditya Pratap can be viewed here.

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