Manifold Advisory

why motor insurance third party compulsory insurance: this is because the motor owner is responsible for causing any harm (tort) to pedestrians or any other person or property while using the vehicle by own or by giving the same to someone (maybe driver, friend or relative). So as an owner of the vehicle he or she must pay for all the damages caused to the person or property of a third party. Therefore Motor Vehicle Act (section 146-47) has made it compulsory for the owner of the vehicle to take compulsory third-party insurance if he or she is bringing the vehicle to a public place. Now public place does not mean that it should be a road or public property and not a private property, the meaning is that it may be a public or private property also, but if public has the access to that property, it is treated as a public place. Now next question is why the Government, State Government, Municipal Corporation or vehicles owned or occupied by the Government do not require third-party insurance which is otherwise mandatory for the general public of our country. The answer is they are exempted, they are under the sovereign immunity clause, exempted from taking third-party insurance, it does not mean that these vehicles are not responsible for third-party loss, they are also answerable in a court of law, but since these vehicles belong to Government, there is a guarantee from Government that in the event of the award passed by Court for third party, payment shall be given by Government. Whereas individuals may run away and may not pay, or even if they wish to pay, they do not have sufficient funds to pay, so what will be the condition of the claimant, who has been given an award but the other party (owner of the vehicle) is having no money to pay. This is the reason third-party insurance is compulsory. Though fact is that in the country fifty percent of vehicles are not taking third-party insurance and that is the biggest problem, they are running on their own and it would be difficult for them to pay for third parties in the event of loss. So what would be the result those who do not have insurance, either run away from the accident spot, or they will try to change the vehicle, they will replace the vehicle in the Police Record which leads to corruption and ultimately loss to the insurance companies, ultimately it is a loss to the society and Nation as a whole. Insurance (risk transfer) from an individual to an Insurance Company ensures and guarantees that the third party will get the awarded amount and therefore insurance has been made compulsory for motor insurance (third party or Act only cover).