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Dec 12 2011 6:02PM
New vehicle insurance to limit liability

Third-party motor vehicle insurance is the bane of the insuring companies existence, with its low premiums and incredibly high number of claims. It doesnot help that India has one of the worst road-safety records in the world.The current laws are part of the Motor Vehicles Act of 1988 and dictate two parameters that hurt insurance companies the most: one, that the premium is regulated by the government, and two, that the liability is unlimited. As a result, third party insurance is ridiculously cheap compared to an equivalent comprehensive cover, and companies are incurring huge losses on third-party claims, especially as far as commercial vehicles are concerned.The Department of Financial Services has constituted a committee that will draft the new legislation, and the recommendations should be submitted by December 14. One of the recommendations is a cap of Rs 10 lakh on the no fault principle and Rs 20 lakh on the fault principle. It will also try and reduce the current many-year time period to a maximum of two years from the date of filing by when the case has to be settled. It is also recommending an interim payment of Rs 1 lakh to a permanently disabled or dead person and Rs 50,000 for permanent partial disablement to be paid within three months of filing the application.There is no concrete date by which the new Motor Vehicles Insurance Act will be formulated, but we are sure that the motor insurance companies are waiting for it with bated breath.
 
 
 
 
 
 
 
 
 
     
 
     
 
 
 
 
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