New Motor Vehicles Act

Hefty Penalties: New Motor Vehicles Act from September 1, 2019

Recently, the parliament has made amendments in the Motor Vehicles Act, and these changes are applicable from 1st of September, 2019.

These changes will help citizens to be vigilant enough of their behaviours/acts while driving and also bring down the number of road accidents.

The Transport Ministry issued a list of these laws as per the New Motor Vehicles Act on 28th of August 2019.

These provisions will not only dig a hole in the pocket of the ones who do the offence but will also be a red flag for their driving skills.

Following is the list of provisions as per the New Motor Vehicles Act:

– A penalty of Rs.2000 on driving vehicles without insurance.

– A penalty of Rs.1000 on two-wheeler riders for riding without a helmet.

– A penalty of Rs.5000 on driving without a valid licence.

– Penalty for over speeding ranges from Rs.1000 to Rs.2000.

– In case of disobedience of the orders of authorities, an individual will be charged a penalty of Rs.2000.

– A heavy penalty of Rs. 10,000 would be imposed on the individuals who are driving despite disqualification.

– A penalty of Rs.5000 on jumping the traffic signal, use of mobile phones while driving, wrong side driving, and on other such dangerous driving acts.

– Driving a four-wheeler without seat belts would be charged Rs.1000.

– Individuals who are driving the vehicle while he or she is drunk will be fined with Rs. 10,000 penalty.

– The penalty for overloading of vehicles would be around Rs. 20,000.

– On blocking emergency vehicles such as ambulance, fire brigade and alike, a penalty of Rs. 10,000 is imposed for this offence.

– Individuals who are underaged/juveniles (not eligible for driving as per the rules) if found driving on the roads, they will be fined with a substantial amount of penalty of Rs. 25,000 along with 3 years of imprisonment to the guardian.

New Motor Vehicles Act Penalty

IRDAI starts a pilot project at four states to track uninsured vehicles

According to the General Insurance Council, around 50% of vehicles running on the Indian roads are uninsured, and the maximum of these vehicles are two-wheelers. Also, as per the Ministry of Road Transport and Highways, in the year 2017, there were around 4,65,000 road accidents and out of which, more than 1.5 lakh people lost their lives. The increasing number of uninsured vehicles on the road has been a significant cause of such a high number of road accidents.

Many vehicles owners do not consider it important to buy or renew insurance. This has an adverse effect and has been the cause of rising road accidents. On this crucial concern, the Insurance Regulatory and Development Authority (IRDAI) has tied up with the state government and initiated a pilot project across four states of the country to keep track of the uninsured vehicles. On implementation of this project, it would now be unmanageable to drive an uninsured vehicle without paying the challan.

As per this project, IRDAI will fetch the data of the uninsured vehicles and pass on this information to the Transport Department. This way, the RTO will get the details of the uninsured vehicles. These details will be further forwarded to the traffic police to keep an eye on such vehicles and charge penalties accordingly.

At the CII Insurance and Pensions Summit, the IRDAI Chairman Subhash Chandra Khuntia stated that “We are working with four state governments on a pilot project on how to contact the owners of the motor vehicles which are not insured and send communication to them so that they can come and renew their insurances.”

Also, as per the new Motor Vehicles Act, vehicles that do not possess a valid third party insurance policy will be fined and in some cases, could lead to imprisonment.

Even the fines have now increased to double the initial set fine, from Rs.1000 to Rs.2000. According to the Insurance Companies, such steps are beneficial as it not only increase the cover of motor insurance but also reduces the risk of accidents.

This initiative will be a push for the uninsured vehicle owners to insure their vehicles at the earliest, and we will likely see a lesser number of accidents.

standalone own damage policy for vehicle from 1st September

From 1st September, IRDAI allows insurers to make ‘standalone own damage’ motor policy available to their customers

As per the Supreme Court order, the Insurance Regulatory and Development Authority of India (IRDAI) were directed to implement the bundling of cover for the Own Damage portion as an immediate necessity from 1st September 2018.

This bundled cover had both essential components, i.e. Own Damage (OD) premium and Third Party (TP) premium. Under bundled cover, a one-year Own Damage component was bundled with a three year and five-year third party liability cover for a private car and two-wheeler respectively.

Before this regulation, the only option was to renew the OD component from the insurer from whom the TP policy is bought. However, with this regulation, renewal of OD policy independently from a different insurer is now possible.

From when is the new standalone Own Damage regulation effective?

The new regulation is effective from 1st September 2019. From or after 1st September 2019, the owners of both new as well old vehicles can buy Own Damage and Third Party policies separately since there would be no compulsion of issuance of bundled policies thereafter.

Also, as per the new regulations, the policyholder of the insured vehicle would be able to renew the Own Damage component of the bundled cover which is falling due on or after 1st September 2019.

The insurance company providing the Own Damage cover should ensure that the policyholder possesses a Third Party cover already or must buy simultaneously.

Furthermore, the Own Damage policy document should have the insurer’s name, policy number and start & end date of the third party policy mentioned on it.

Also, it should be already clearly mentioned in the standalone OD policy that the coverage is only for Own Damage and no for other liabilities related to the vehicle.

What are Own Damage (OD) and Third-party (TP) cover?

OD helps to cover the loss or damage caused (including theft) to the insured vehicle which is insured whereas TP helps to cover the injury or damage caused by the insured vehicle to another person or third-party property.

Note: As per the Motor Vehicles Act, 1988, the third-party liability cover is mandatory in India.

What is the impact of allowing the issuance of standalone OD policy regulation?

By making the changes in the earlier orders, the IRDAI has asked the general insurance companies to make their customers available with the standalone annual Own Damage (OD) covers for both cars and two-wheelers. Moreover, this new regulation would be applicable not only for new vehicles but also for old vehicles.

It is also a good incentive for all the policy seekers or policyholders who were looking for standalone options after the bundled policy regulation effectiveness. As after 1st September, the policyholders are not bounded to the same insurer to renew the OD cover in the following year, even those who had bought a bundled policy from a different insurer. Policyholders can renew OD policy as a standalone plan from another insurer despite having TP from another insurer.

And for insurance companies, this regulation offers clarity for providing OD covers to their customers.

Do the policyholder of the insured vehicle needs to continue with the same insurer for both OD and TP?

The insured need not stick to the same insurer for both OD and TP policy. Rather than continuing with the one you had for the third party, you have a choice to renew the Own Damage part from another insurer as well.

What would be the cost of the standalone Own Damage policy?

The best part is that the pricing of this new standalone Own Damage would not differ; instead, it would be the same as that of the OD component of the package policy.

The bottom line is, the vehicle owner now has the option to buy the Own Damage policy component individually from a different insurer than the insurer from whom the TP or bundled policy is bought.