Insurance firms may have to pay only up to Rs.10 lakh for accidents

A proposed amendment to the Motor Vehicles Act, 1988 could mean bad news for vehicle owners in case of road accidents.

The amendment, proposed by the ministry of road transport and highways earlier this year, suggests the reduction of liability of insurance companies to a maximum of Rs10 lakh in case of accidents. Anything beyond this will have to be footed by the owner of the vehicle. The proposal also omits the provision of interim compensation to victims, as is the case now.

Presently, insurance companies compensate those injured or families of victims as per the decision of the claims tribunal, on behalf of the owner.

However, the bill for the amendment to the act provides for stringent punishment for various offences including speeding and drink driving.

“Presently the entire compensation is paid by the insurance company. According to the proposed amendment, the insurance company will share the liability with the owner and pay compensation only upto Rs. 10 lakh. The rest will have to be borne by the owner of the vehicle involved in the accident,” said NS Pawar, president, bar association of the Motor Vehicle Claims Tribunals (MACT).

The proposed amendment also omits the provision of immediate compensation. The present law provides for immediate compensation of upto Rs. 50,000 to those injured or to the family of victims of accidents for treatment or even performing the last rites.

The bill for the amendment was passed by the Rajya Sabha in May 2012 but is now pending for consideration in the Lok Sabha.

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