Traffic penalties versus buying Insurance policy

Traffic penalties vs insurance

According to the Motor Vehicles Act, 1988 a motor insurance policy is mandatory for all the vehicles being driven on the roads of India. Under Section 130 r/w 177 Motor Vehicle Act, a person riding a vehicle without a valid motor insurance policy will have to pay Rs. 1000 as a penalty along with or without imprisonment of three months. Earlier, many vehicle riders used to avoid this motor vehicle insurance with an objective of saving premium.

A third party motor insurance is a mandatory requirement in India. As per this, the third party motor insurance will cover the liabilities caused due to any damage or death of the third party person/property because of the insured motor vehicle being at fault.

However, there have been new amendments made into the Motor Vehicles Act and the penalty provisions have been revised. Previously, the vehicle riders used to pay the penalty as it was not a hefty amount and would skip the motor insurance policy. With revised penalty rates, vehicle owners and riders have started re-thinking about this approach now.

Amendments made into the Motor Vehicles Act

Due to the amendments made into the Motor Vehicle Act, the traffic rules have become quite stringent and violations of traffic rules by vehicle riders would be penalized heavily.

  • In case of a vehicle driver is caught driving a vehicle without a valid motor vehicle insurance, then for the first time of the offense the penalty to be paid is Rs. 2000 along with or without imprisonment of up to 3 months. In case of the offense committed for the second time, the penalty to be paid is Rs. 4000 and/or imprisonment up to 3 months.
  • In case of a vehicle driver driving a vehicle without a license, the penalty to be paid is Rs. 5000.
  • For drivers riding unauthorized vehicles without a valid license, the penalty to be paid has been raised to Rs. 5000 from Rs. 1000.
  • If the driver of the vehicle is driving under the effect of alcohol or other intoxicating substance, then for the first time offense the penalty to be paid is Rs. 10,000 along with or without imprisonment for 6 months. For the offense being committed the second time, the penalty to be paid is Rs. 15,000 along with or without imprisonment for 6 months.
  • The penalty for violation of traffic rules is between Rs. 500 to Rs. 1000.

In addition to the above-mentioned amendments in traffic rules, there are several other aspects of traffic rules which when violated will be dealt with stringently now onwards.

Increase in traffic rule compliance

The new traffic rules and the hefty fines would definitely change the attitude of common people towards traffic rules now. According to the new traffic rules, if a vehicle driver is found to be doing rash driving then for a first-time offense, then the driver would have to face imprisonment of 6 months to 1 year along with or without a penalty of Rs. 1000 to Rs. 5000. For a second time offense, the driver would be imprisoned for 2 years and/or a penalty of Rs. 10,000.

These traffic rules are quite strict and the penalty amount is also high. Furthermore, the IRDAI (Insurance Regulatory and Development Authority of India) is planning to link the motor vehicle insurance premium with traffic rule violations. So, with this, the compliance of traffic rules and demand for motor insurance is on a rise.

Benefits of having motor insurance:

  1. A third party liability coverage motor insurance is mandatory in India. This will help in providing financial coverage in case of any damage done to third party person or vehicle during an accident.
  2. In case of accidents, motor insurance will cover the bills of vehicle repairs caused due to accident.
  3. Motor insurance will cover the damage caused to the vehicle because of any natural calamities like floods, earthquakes, storm, etc.
  4. Damages caused to the vehicle due to man-made calamities such as riots, theft, etc. are covered by motor insurance.
  5. With a motor insurance, there will be no worries related to the monetary expenses involved in an accident.

Increase in demand for motor insurance policy

The new amendments to the Motor Vehicles Act came into effect from 1st September 2019. Since then, there has been an increase in the purchase and renewal of motor insurance policies. More and more vehicle owners have started the renewal of their lapsed motor insurance policy. The purchase of a new motor insurance policy has also seen a huge rising trend in the last month. Common people in India have gradually started realizing the fact that it is better to buy a motor insurance and be safe from the clutches of law which can take stringent action for traffic rule non-compliance.

With these new amendments in the Motor Vehicles Act, huge growth in the motor insurance segment is expected. This will be a golden opportunity for the insurance advisors as there are increased business opportunities and they can sell more and more motor insurance policies. Vehicle owners and drivers have now started rethinking before skipping motor insurance and this has led to an increase in the demand for motor insurance policies.

Hence, these changes into traffic rules have bought an increase in the sale of motor insurance policies and a change of attitude towards traffic rule compliance.

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