Did you know that third-party liability insurance is to be capped at Rs. 10 lakh? Read ahead to know all about this new proposed revision in the Motor Vehicles Act.
As per a new amendment proposed in the Motor Vehicles Act, third-party liability will be capped at Rs. 10 lakh in case of accidents. Currently, the liability is unlimited. Hence, there have been mixed reactions in the insurance industry about this new proposal. Though many believe that it is a friendly proposal for policyholders, some are skeptical that this reformation may not immediately translate in reduction of third-party premiums.
The impact of capping would affect insurers only after a few years – majorly when claims that are initiated on policies post the amendment, would be determined by the court.
Over a period, the rates would stabilize and be affordable to all policyholders.
So long, IRDA has been fixing third-party rates. However, according to the proposed revision, third-party premium would now be fixed by the central government.
Since, third-party insurance is compulsory for all motor vehicles, it is considered that the government should even mandate the premiums across all insurers. This would benefit the policyholders, as they can receive equal third-party quotes from insurers who would have to operate within sustainable levels.
Moreover, capping third-party liability also makes the owner of the vehicle more responsible while driving, thus reducing chances of road accidents. Thus, making it a win-win situation for all stakeholders.