MODULE 6:

THE MOTOR VEHICLE

INSURANCE:
Adv. Mahesh Tak

● Scheme of compulsory insurance

● Certificate of insurance, Transfer of insurance policy
● Right of an insurer to defend Duty to satisfy
judgments
● Road Safety Measures
● Categories of offences
● National transportation policy
● Motor Vehicle Accident Fund

Motor Insurance in India

● Motor insurance is a type of insurance policy that provides financial

protection against losses or damages caused to a vehicle, its owner,
or third parties due to accidents, theft, fire, or natural disasters.

● In India, motor insurance is mandatory under the Motor Vehicles Act,

1988, making it illegal to drive a vehicle on public roads without a valid
insurance policy.
 Legal Framework for Motor Insurance in India

● Motor insurance in India is governed by a comprehensive legal

framework to ensure road safety, financial protection, and compliance
with statutory obligations.

● The Motor Vehicles Act, 1988, along with the Insurance Act, 1938, and
guidelines issued by the Insurance Regulatory and Development
Authority of India (IRDAI), regulate motor insurance policies.

Laws Governing Motor Insurance in India

The Motor Vehicles Act, 1988 (MV Act)

● This is the primary law governing motor insurance. It makes third-party insurance
mandatory for all vehicles operating on public roads. Key provisions include:

● Section 146 – Mandatory Third-Party Insurance

• No vehicle can be used in a public place without a valid third-party insurance policy.

● Section 147 – Minimum Coverage Requirements

• The policy must cover death, bodily injury, and property damage caused to third parties.

● Section 149 – Insurer’s Liability to Pay Compensation

• The insurer must compensate third-party victims irrespective of fault.

• Section 157 – Transfer of Insurance Policy

• Insurance must be transferred to the new owner within 14 days of vehicle sale.

• Section 161 – Compensation for Hit-and-Run Cases

• Government-funded compensation for victims where the offending driver is
unknown.

• ₹2 lakh for death & ₹50,000 for serious injury.

The Insurance Act, 1938

• Governs the licensing and regulation of insurance companies in India.

• Ensures that insurers maintain adequate solvency margins to honor claims.

IRDAI (Insurance Regulatory and Development Authority of India) Guidelines

• Regulates premium pricing, policy terms, and claim settlement processes.

Public Liability Insurance Act, 1991

• The Public Liability Insurance Act, 1991 was enacted to provide immediate relief to victims of accidents involving hazardous
substances. It mandates industries and vehicle owners transporting dangerous goods to have compulsory insurance
coverage for third-party liability.

Types of Motor Insurance in India

● Motor insurance in India is broadly categorized into two types: Third-Party

Insurance (mandatory by law) and Comprehensive Insurance (optional but
recommended). Additionally, there are specialized policies designed for specific
vehicle categories and usage.

Mandatory Insurance: Third-Party Liability Insurance

What is Third-Party Insurance?

• Required under Section 146 of the Motor Vehicles Act, 1988.

• Covers injuries, death, or property damage caused to a third party

by the insured vehicle.

• Does not cover damages to the policyholder’s vehicle or personal

injuries
Third Party Insurance in Motor Vehicles Act, 1988

● The concept of third party in motor vehicle insurance plays a crucial

role in protecting the rights of individuals who may suffer injuries or
damages due to road accidents. The term “third party” refers to any
person other than the insurer and the insured, ensuring that those
affected by motor vehicle accidents receive compensation.

Need for Third-Party Insurance

● Historically, many victims of road accidents—especially pedestrians—were

left uncompensated because the vehicle owners lacked financial resources
or insurance. To address this issue, the Motor Vehicles Act, 1988,
introduced compulsory third-party insurance, making it mandatory for all
motor vehicles operating in public places. However, insurance against
damage to one's own vehicle (own damage insurance) remains optional.

Features of Compulsory Third-Party Insurance

Compensation for Third-Party Injuries and Deaths

• If an accident causes injury, disability, or death, the insurer must compensate

the victim or their family.

• The compensation amount is decided by Motor Accident Claims Tribunal based

on the victim’s income, medical expenses, and severity of injury.

Property Damage Coverage

• The policy covers damage to third-party property (e.g., a car crashing into a shop
or another vehicle).
 Comprehensive Insurance (Optional but Recommended)

What does it cover?

• Includes Third-Party Insurance + Own Damage Coverage (damage to the policyholder’s vehicle due to an
accident, fire, theft, natural calamities, etc.).

• Provides higher financial protection for the vehicle owner.

• Example: If a car is damaged in a flood, a comprehensive policy will cover repair costs.

Additional Riders (Optional Add-ons):

• Zero Depreciation Cover – Full claim without factoring depreciation on car parts.

• Roadside Assistance Cover – Assistance for breakdowns or emergencies.

• Engine Protection Cover – Covers damage to the engine due to waterlogging.

Recent Developments in Motor Vehicle Insurance

Long-Term Third-Party Insurance (Effective 2018)

• IRDAI mandates 5-year third-party insurance for new two-wheelers and 3-year third-party insurance for new four-
wheelers.

• This rule ensures continuous coverage and avoids policy lapses.

Digitization & E-Insurance Policies

• Policies can be purchased, renewed, and claimed online for ease of access.

• E-insurance reduces paperwork and speeds up claims processing.

Faster Claim Settlement through Technology

• Introduction of AI-based claim assessments and instant approvals for minor claims.

• Motor Accident Claims Tribunal (MACT) cases are being expedited using digital records.

Claim Process for Third-Party Insurance

1. Inform the insurer immediately after an accident.

2. File an FIR at the nearest police station.

3. The case goes to the Motor Accidents Claims Tribunal (MACT),

which decides the compensation amount.

4. The insurance company pays the compensation directly to the

victim or their family.
 Legal Provision relating to The Motor
Vehicle Insurance

Section 140 of the Motor Vehicles Act, 1988 – No-Fault Liability for
Compensation

● Section 140 of the Motor Vehicles Act, 1988 establishes the principle of
"no-fault liability," meaning that in cases of death or permanent
disablement caused by a motor vehicle accident, compensation is payable
automatically, without proving negligence or fault.

No-Fault Liability (Sub-section 1)

• If a person dies or suffers permanent disability due to a motor accident, the vehicle owner is automatically liable to pay
compensation.

• If multiple vehicles are involved, all owners are jointly and severally liable (i.e., each is fully responsible for paying the
compensation).

• Example: If a pedestrian is hit by a speeding car and dies, the car owner must pay compensation,

Fixed Compensation Amount (Sub-section 2)

• The compensation amount is fixed and does not depend on actual loss or income levels:

• Death: ₹50,000 (earlier; now revised to ₹5,00,000 under recent amendments).

• Permanent Disability: ₹25,000 (earlier; now revised to ₹2,50,000).

• Example: If a biker loses both legs in an accident, he is entitled to ₹2,50,000, regardless of his salary or medical
expenses.
 No Need to Prove Fault or Negligence (Sub-section 3 & 4)

• The claimant does not have to prove that the accident was caused by the owner’s fault or negligence.

• The claim cannot be denied even if the victim was partially responsible (e.g., not wearing a helmet or crossing the
road illegally).

• Example: If a bus hits a pedestrian crossing outside a zebra crossing, the bus owner is still liable to pay ₹5,00,000
without debating who was at fault.

Compensation Under Other Laws (Sub-section 5)

• If the victim is entitled to higher compensation under other laws (e.g., Motor Accident Claims Tribunal under
Section 163A), the amount paid under Section 140 will be adjusted.

• Example: If a victim’s family is awarded ₹10,00,000 under Section 163A, the ₹5,00,000 received under Section 140
will be deducted, so the final payout is ₹5,00,000 more.

Section 146 Necessity for Insurance Against Third-Party Risk

● Section 146 mandates that every motor vehicle operating in a public place must have a valid
third-party insurance policy to cover liabilities arising from injury, death, or property damage
caused to third parties.

Compulsory Third-Party Insurance (Sub-section 1)

● No person shall use or allow another person to use a motor vehicle in a public place without a
valid third-party insurance policy.

● This ensures financial protection for third parties affected by an accident.

● Exception: A person driving a vehicle as a paid employee without knowledge that the vehicle
lacks insurance will not be held liable under this section.

● Example: If a driver employed by a company is unaware that the company failed to renew the
vehicle’s insurance, the driver cannot be punished under this section.

Special Insurance Requirement for Hazardous Goods Vehicles (Proviso to Sub-

section 1)

• Vehicles transporting hazardous goods must have additional insurance coverage

under the Public Liability Insurance Act, 1991.

• This protects against environmental and public hazards in case of accidents involving
dangerous substances like chemicals, LPG, or petroleum.

• Example: A truck carrying chemicals must have both motor third-party insurance and
public liability insurance to cover damages due to spills or explosions.
Exemptions for Government Vehicles (Sub-section 2 & 3)

• Sub-section 2: Vehicles owned by the Central or State Government, used for non-commercial
government purposes, are exempt from mandatory insurance.

• Sub-section 3: The appropriate government may exempt vehicles owned by:

• The Central or State Government (if used for commercial purposes).

• Local authorities (such as municipal corporations).

• State transport undertakings (such as state-run bus services).

Condition for Exemption:

• These authorities must establish a fund to compensate third parties in case of an accident.

• Rules for managing such funds are framed under the Motor Vehicles Act.

• Example: A government ambulance used for emergency services does not need insurance, but a
government-owned transport bus must either have insurance or maintain a compensation fund.

Section 147 Requirements of Policies and Limits of Liability

● Section 147 lays down the mandatory requirements for a motor insurance policy to be
considered valid under the law. It specifies the types of coverage, the limits of liability,
and the conditions for issuing insurance policies.

Insurance Policy Must Be Issued by an Authorized Insurer (Sub-section 1(a))

● The insurance policy must be issued by an authorized insurer licensed by the Insurance
Regulatory and Development Authority of India (IRDAI).

● Unauthorized policies are invalid under the law.

● Example: If a person buys an insurance policy from an unregistered company, it will not
be legally recognized.

Compulsory Coverage Under the Policy (Sub-section 1(b))

● The policy must cover the following liabilities:

Third-Party Liability (Sub-section 1(b)(i)):

● The insurance must cover death, bodily injury, or property damage to any third party
caused by the insured vehicle in a public place.

● Includes owners of goods or their authorized representatives carried in the vehicle.

Passenger Liability in Public Transport Vehicles (Sub-section 1(b)(ii)):

● The insurance must cover bodily injury or death of passengers in a public service
vehicle (e.g., buses, taxis, auto-rickshaws).
Exceptions (Proviso to Sub-section 1): The policy does not need to cover:

Employees' death or injury in the course of employment, except for:

• The driver of the vehicle.

• The conductor or ticket examiner in a public transport vehicle.

• An employee traveling in a goods vehicle.

• Contractual liability (i.e., liabilities agreed upon in a private contract, not required under the law).

• Example: If a factory truck carrying workers meets with an accident, the injured workers cannot
claim under motor insurance but may claim under the Workmen’s Compensation Act, 1923.

Liability Coverage Limits (Sub-section 2)

● The insurance policy must cover liabilities up to the following limits:

● For death or bodily injury → No upper limit (full liability).

● For third-party property damage → Maximum of ₹6,000 (old limit; now

increased to ₹7.5 lakh as per IRDAI regulations).

● Example: If an insured car causes an accident, leading to a third party’s

death, the insurer must pay the full compensation. However, if the car
damages a third party’s shop, the compensation is limited to ₹7.5 lakh.

Certificate of Insurance (Sub-section 3)

• The insurance policy is not valid unless an official certificate of insurance

is issued by the insurer.

• This certificate contains policy conditions, terms, and coverage details.

• Example: A vehicle owner must carry the insurance certificate while

driving as proof of compliance with the law.
 Certificate of Insurance (COI)

What is a Certificate of Insurance?

● A Certificate of Insurance (COI) is a document issued by the insurance company that serves as proof of

valid insurance for a motor vehicle. It contains essential details about the policyholder, vehicle, and

insurance coverage.

Features of a Certificate of Insurance

● Issued by the insurer after the purchase of a third-party or comprehensive insurance policy.

● Required under Section 146 of the Motor Vehicles Act, 1988.

● Must be carried by the vehicle owner while driving and presented when required by traffic authorities.

Details Included in a Certificate of Why is COI Important?

Insurance
• Required to legally drive a vehicle on public
● Policyholder’s Name & Address roads.

● Vehicle Details (Make, Model, Registration • Needed for vehicle registration and road tax
Number, Chassis & Engine Number)
payment.

● Policy Type (Third-party or Comprehensive)

• Essential for claim settlement in case of an
● Policy Number accident.

● Coverage Period (Start & Expiry Date) • Mandatory when transferring an insurance

● Premium Amount Paid policy during vehicle resale.

● Insurer’s Name & Contact Details

Cover Note and Notification to Registering Authority (Sub-section 4)

• If an insurer issues a cover note (temporary insurance proof), it must be followed by a

full policy within the prescribed time.

• If no policy is issued, the insurer must notify the registering authority within 7 days.

• Example: If a car buyer gets a temporary insurance cover note, but the insurer fails
to issue a full policy, the insurer must inform the RTO within a week.
 Insurer’s Liability to Indemnify Policyholders (Sub-section 5)

• Once an insurer issues a valid policy, it is legally bound to compensate for

liabilities covered under the policy.

• Insurers cannot refuse to pay claims for covered risks.

Example:

• If an insured vehicle is involved in a third-party accident, the insurance company

must compensate the affected party, even if the policyholder has not paid the full
premium.

Section 149 Duty of insurers to satisfy judgments and awards

against persons insured in respect of third party risks

● Section 149: This section ensures that victims of motor accidents

receive compensation, even if the insurer has reasons to deny liability
under the insurance policy.

Obligation of Insurers to Pay Compensation (Sub-section 1)

● If a person insured under a motor insurance policy is held liable for an accident and a court or tribunal grants
compensation to a third party, the insurer must pay the compensation amount even if the insurance policy has been
canceled or is voidable.

Example:

● Suppose Rahul owns a car and has a valid third-party insurance policy from XYZ Insurance Co..

● He gets into an accident, and the victim (Shyam) files a case before the Motor Accident Claims Tribunal (MACT).

● The tribunal orders Rahul to pay ₹5 lakh as compensation to Shyam.

● Even if Rahul’s policy had been canceled due to non-payment of the premium, XYZ Insurance Co. must still pay Shyam
the compensation.
Exceptions Where the Insurer Can Deny Liability (Sub-section 2)

● An insurer is not required to pay compensation if:

● They did not receive notice of the legal proceedings before the award was passed.

● Execution of the award is stayed due to an appeal.

● The policyholder violated specific conditions of the policy, including:

○ Unauthorized use of the vehicle:

■ If a personal car is used as a taxi without a commercial permit.

■ If a transport vehicle is used for a purpose not mentioned in its permit.

○ Unlicensed or disqualified driver: If the driver did not have a valid driving license at the time of the accident.

○ Use in war, riots, or civil commotion: If an accident occurs due to warlike conditions, the insurer is not liable.

○ Fraud or misrepresentation: If the policyholder provided false information while obtaining the policy.

Example:

• Amit owns a private car but uses it as an Uber taxi without a commercial permit.

• One day, he meets with an accident, and the victim (Neha) claims compensation.

• Since the car was being used for a purpose not covered by the policy, the insurer

can refuse to pay the compensation.

Application to Foreign Judgments (Sub-section 3)

If a judgment is passed in a reciprocating country (as per the Code of Civil

Procedure, 1908), the Indian insurer must still satisfy the judgment if it is recognized
under Indian law.

Example:

• Suppose Sanjay owns a truck insured in India. While driving in Nepal (a

reciprocating country), he causes an accident.

• A Nepalese court orders compensation to the victim.

• The Indian insurer must pay the compensation if the judgment is valid under
Indian law.
 Transfer of Insurance Policy

What is the Transfer of a Motor Insurance Policy?

● When a vehicle is sold, the insurance policy must be transferred to the new owner to ensure that they are
legally covered under the same policy. The process involves updating the insurer with the new owner’s details
and getting a new Certificate of Insurance (COI).

Why is Insurance Transfer Necessary?

● The Motor Vehicles Act, 1988 (Section 157) mandates that insurance must be transferred within 14 days
of vehicle ownership transfer.

● If the insurance is not transferred, the new owner won’t be eligible for claims, and the previous owner could
be held liable for future accidents.

● Ensures uninterrupted coverage for the new vehicle owner.

Automatic Transfer of Insurance Policy (Subsection 1)

• When a vehicle owner sells or transfers their motor vehicle, the insurance policy automatically
transfers to the new owner.

• This includes both the certificate of insurance and the policy issued for the vehicle.

• The transfer happens from the date of transfer of the vehicle.

• The Explanation clarifies that the transfer includes all rights and liabilities under the policy, meaning
the new owner gets the same coverage and also inherits any pending claims or obligations.

Example:

• Amit sells his car to Rohan on March 1, 2025. The insurance policy that Amit had taken for the car
automatically transfers to Rohan from that date. If an accident occurs on March 2, Rohan is covered
under the same policy.

Obligation of the New Owner (Subsection 2)

• The new owner (transferee) must inform the insurance company about the transfer
within 14 days.

• This must be done in the prescribed form.

• The insurance company is then required to update the records to reflect the new
owner.

Example:

• Rohan, after purchasing the car from Amit, must notify the insurance company before
March 15, 2025, and request the insurer to update the policy in his name. Once
updated, all documents will reflect Rohan as the insured person.
Documents Required for Insurance Transfer

For the Buyer (New Owner): For the Seller (Previous Owner):
● Original Insurance Policy Document
• Sale Agreement/Delivery Note (Proof
● Form 29 & Form 30 (Vehicle Ownership Transfer Forms)
of sale)
● No Objection Certificate (NOC) from the previous owner
• Request letter for policy transfer
● Copy of New Registration Certificate (RC) in the buyer’s
name

● Vehicle Inspection Report (from the insurer, if required)

● ID & Address Proof of the new owner

Process of Insurance Transfer

1. Inform the Insurance Company : The buyer must notify the insurer within 14 days of
vehicle purchase.

2. Submit Required Documents : Provide RC, sale agreement, and insurance policy for
transfer approval.

3. Pay the Policy Transfer Fee : A nominal transfer fee (varies by insurer) must be paid.

4. Vehicle Inspection (if needed) : Some insurers conduct an inspection before transferring
insurance.

5. Receive the New Certificate of Insurance (COI) : Once approved, the insurer issues a new
COI in the buyer’s name.

Road Safety Measures

● India ranks among the top countries in the world for road traffic fatalities,
with over 1.5 lakh deaths annually. Addressing this crisis requires a multi-
pronged approach, involving legislation, infrastructure improvement,
technological advancements, and public awareness campaigns.

● This detailed discussion covers the key road safety measures adopted in
India, supported by examples and real-world applications.
 Legislative Measures: Strengthening Laws for Road Safety

● Legislation is the backbone of road safety. It provides a framework for

traffic management, penalties for violations, and accountability for
road users.

The Motor Vehicles Act, 1988 (Amended in 2019)

● The Motor Vehicles (Amendment) Act, 2019 introduced stringent

provisions to enhance road safety and ensure responsible driving.

Reforms & Impact

Penalty After 2019
Violation Penalty Before 2019 Impact
Amendment
Reduced drunk driving
Drunk Driving ₹2,000 ₹10,000 + 6 months jail
cases
Ensured only qualified
Driving Without License ₹500 ₹5,000
drivers on roads
Decreased high-speed
Overspeeding ₹400 ₹1,000-4,000
accidents
₹1,000 + license Increased helmet
Not Wearing a Helmet ₹100
suspension compliance

Encouraged seatbelt
Not Wearing a Seatbelt ₹100 ₹1,000
usage, reducing fatalities

Good Samaritan Law – Protecting Those Who Help Accident Victims

● A major reason accident victims do not receive timely medical help is the fear of police harassment. The Good
Samaritan Law addresses this issue.

Provisions:

● Any person who helps an accident victim cannot be legally harassed.

● Hospitals must provide emergency treatment without demanding police formalities.

● A Good Samaritan cannot be forced to appear in court as a witness.

Example:

● Ramesh witnessed a road accident and took the injured victim to the hospital. Thanks to the Good Samaritan Law, he
was not questioned by the police or forced to appear in court, making him more willing to help others in the future.
Engineering & Infrastructure Measures: Safer Roads for All

● A well-designed road system plays a vital role in accident prevention. Poor infrastructure, lack of signage, and absence of
pedestrian-friendly designs are major contributors to accidents.

Identifying & Improving Accident-Prone Zones (Black Spots)

● The Indian government has identified over 5,000 accident-prone black spots and is taking corrective measures such as:

● Installing median barriers to prevent head-on collisions.

● Improving road signs and lighting for better visibility.

● Constructing flyovers and bypasses to ease traffic congestion.

Example:

● The Delhi-Gurgaon Expressway had frequent accidents due to poor lane discipline and high speeds. After installing
speed cameras, warning signs, and lane barriers, accidents reduced by 30%.

Speed Limit Enforcement & Automated Traffic Management

● Speeding is one of the leading causes of fatal accidents in India. To curb

overspeeding, authorities have implemented:

● Radar-based Speed Cameras that detect speeding vehicles.

● Automatic Challan Systems, where e-challans are issued based on CCTV footage.

● Variable Speed Limit Signs, which adjust speed limits dynamically based on traffic
conditions.

Example:

● On the Mumbai-Pune Expressway, radar cameras capture vehicles exceeding 100

km/h. The system automatically issues fines via SMS, discouraging overspeeding.

Enhancing Pedestrian & Cyclist Safety

● Pedestrians and cyclists are among the most vulnerable road users. The following
measures have been taken to protect them:

● Dedicated footpaths & cycling lanes to separate slow-moving and fast-moving

traffic.

● Foot Over Bridges (FOBs) & Underpasses at high-traffic intersections.

● Pelican Signals, where pedestrians can stop traffic by pressing a button.

Example:

● In Bangalore, newly installed pelican signals reduced jaywalking-related accidents

by 40%, ensuring safer pedestrian movement.
Technological Measures: Using Innovation for Safer Roads

● Technology-driven solutions are revolutionizing road safety in India.

Intelligent Traffic Management Systems (ITMS)

● AI-based CCTV cameras detect violations such as signal jumping and improper lane usage.

● GPS-based traffic monitoring helps in managing congestion and rerouting vehicles in real
time.

Example:

● Hyderabad’s AI-driven traffic monitoring system has reduced signal violations by 20%,
making intersections safer.

Vehicle Safety Enhancements

● The government has introduced stricter vehicle safety norms, including:

● Mandatory ABS (Anti-lock Braking System) in two-wheelers, preventing skidding.

● Dual airbags required in all cars from 2022.

● Crash Test Ratings (Bharat NCAP) to encourage safer car designs.

Example:

● The Tata Nexon became India’s first car to receive a 5-star Global NCAP rating,
influencing other manufacturers to focus on safer vehicle designs.

Emergency Response Systems

• National Highway Accident Helpline – 1033 for immediate assistance.

• Automatic Crash Detection Systems in modern cars, which notify

emergency services in case of an accident.

Example:

• Cars with e-Call systems automatically notify ambulances and police in

case of a crash, reducing response time and increasing survival rates.
Awareness & Educational Initiatives: Changing Driver Behavior

● Awareness campaigns and driver education programs help create a responsible driving
culture.

Nationwide Road Safety Campaigns

● "Sadak Suraksha Jeevan Raksha" – Government-led initiative promoting safe driving

habits.

● "No Honking Drive" – Campaign to reduce noise pollution and promote lane discipline.

● Example:

● Mumbai Police uses social media, humor, and memes to spread road safety messages,
making them engaging and effective.

Driver Training & Licensing Reforms

• Strict Driving Tests to ensure drivers are well-trained before getting a license.

• Driver Training Centers (DTCs) offering professional training to new drivers.

Example:

• Maruti Suzuki’s Driving School has trained over 5 lakh drivers, reducing
accidents caused by untrained motorists.

Categories of Offences Under the Motor Vehicles Act,

1988

● The Motor Vehicles Act, 1988, provides a legal framework for regulating
motor vehicles, ensuring road safety, and penalizing traffic violations. The
Act categorizes offences related to motor vehicles, prescribing penalties for
violations. The key categories of offences are as follows:
 General Traffic Offences

● Contravention of Rules: Any violation of the provisions of the Act where no

specific penalty is mentioned is punishable with a fine of up to ₹100 for the first
offence and ₹300 for subsequent offences​.

● Disobedience of Authorities: Refusal to obey lawful orders of a traffic officer can

attract a fine of ₹500.

Offences Related to Licensing and Permits

∙ Driving Without a Valid License: Driving without a valid or authorized license can
lead to a fine of up to ₹500 or imprisonment for up to 3 months​.
∙ Driving Despite Disqualification: If a person drives a vehicle after being disqualified,
they may face imprisonment of up to 3 months or a fine of ₹500.
∙ Allowing Unauthorized Persons to Drive: The owner or person in charge of a vehicle
allowing an unauthorized person to drive may face a fine of ₹1,000 or imprisonment for
up to 3 months​.

Offences Related to Driving Conduct

∙ Over-Speeding: Exceeding the prescribed speed limits results in a fine of up to ₹400 for
the first offence and ₹1,000 for repeat offences​.

∙ Dangerous Driving: Driving in a manner that endangers the public can lead to
imprisonment of up to 6 months and a fine of ₹1,000 for the first offence, and up to 2 years
of imprisonment and ₹2,000 fine for repeated offences​.

∙ Drunk Driving: Having a blood alcohol level exceeding 30 mg per 100 ml or driving under
the influence of drugs can result in imprisonment of up to 6 months and a fine of ₹2,000
for the first offence, and up to 2 years of imprisonment for repeated offences​.

∙ Driving When Physically or Mentally Unfit: A driver aware of their physical or mental
incapacity yet driving may face a fine of ₹200 for the first offence and ₹500 for subsequent
offences​.
 Offences Related to Accidents

∙ Failure to Report an Accident: Failure to report an accident to the authorities can result in
imprisonment of up to 3 months or a fine of ₹500.

∙ Fleeing from an Accident Scene: Not stopping a vehicle after causing an accident can
result in imprisonment of up to 6 months or a fine of ₹1,000.

∙ Obstructing Traffic After an Accident: If a vehicle involved in an accident is left

unattended causing obstruction, a fine of ₹50 per hour is applicable​.

Offences Related to Vehicle Conditions

∙ Driving an Unsafe Vehicle: Using a defective or unfit vehicle can lead to fines of
₹250 or more, and if the defect causes an accident, the penalty may increase​.
∙ Driving Without Insurance: Operating an uninsured vehicle can result in
imprisonment for up to 3 months or a fine of ₹1,000.
∙ Illegal Alteration of Vehicles: Selling or altering vehicles in a manner that
contravenes safety laws may attract fines of up to ₹500.

Offences Related to Public Transport

∙ Refusal to Ply a Public Transport Vehicle: Drivers of taxis, autos, or buses refusing to ply can be
fined ₹50 (for two or three-wheelers) and ₹200 (for other vehicles)​.

∙ Travelling Without a Ticket: A passenger found without a valid ticket may have to pay a fine of
₹500.

Juvenile Offences

∙ Penalties for Juvenile Offenders: If a juvenile commits a traffic offence, the vehicle owner (typically
the parent/guardian) may face a fine of ₹25,000, and the registration of the vehicle may be cancelled​.

∙ Ban on Obtaining a License: A juvenile offender will not be eligible for a driving license until the age
of 25.
Commercial Vehicle Offences
∙ Overloading: Driving a vehicle exceeding the permissible weight limit can result in
a fine of ₹2,000 plus ₹1,000 per additional tonne​.
∙ Operating Without a Permit: Using a transport vehicle without a valid permit can
lead to imprisonment or fines​.

General Traffic Offences

Offence Description Penalty Legal Provision

Violation of provisions without ₹100 (first offence),

Contravention of Rules Section 177
specific penalties ₹300 (subsequent)

Disobedience of Refusal to obey lawful orders of

₹500 Section 179
Authorities traffic officers

Offences Related to Licensing and Permits

Offence Description Penalty Legal Provision

Driving Without a Operating a vehicle ₹500 or imprisonment

Section 181
License without a valid license up to 3 months

Driving Despite Driving after being ₹500 or imprisonment

Section 182
Disqualification disqualified up to 3 months

Allowing Unauthorized Letting an unlicensed ₹1,000 or imprisonment

Section 180
Driving person drive up to 3 months
 Offences Related to Driving Conduct
Offence Description Penalty Legal Provision

Exceeding prescribed speed

Over-Speeding ₹400 (first offence), ₹1,000 (repeat) Section 183
limits

₹1,000 fine + 6 months jail (first

Driving in a manner
Dangerous Driving offence), ₹2,000 fine + 2 years jail Section 184
dangerous to the public
(repeat)

Driving under the influence of ₹2,000 fine + 6 months jail (first

Drunk Driving Section 185
alcohol/drugs offence), ₹2 years jail (repeat)

Driving While Driving despite ₹200 (first offence), ₹500

Section 186
Unfit physical/mental unfitness (subsequent)

Offences Related to Accidents

Offence Description Penalty Legal Provision

Failure to Report Not reporting an ₹500 or 3 months

Section 134
Accident accident to authorities imprisonment

Fleeing from Accident Not stopping a vehicle ₹1,000 or 6 months

Section 187
Scene after an accident imprisonment

Leaving a vehicle
Obstructing Traffic
unattended, causing ₹50 per hour Section 201
After an Accident
obstruction

Offences Related to Vehicle Conditions

Offence Description Penalty Legal Provision

Driving an Unsafe Using a vehicle in ₹250 fine (higher if an

Section 190
Vehicle defective condition accident occurs)

Driving Without Operating a vehicle ₹1,000 or 3 months

Section 196
Insurance without valid insurance imprisonment

Unauthorized alteration
Illegal Vehicle
of vehicles violating ₹500 Section 191
Modification
safety laws
 Offences Related to Public Transport

Offence Description Penalty Legal Provision

Refusal to Ply a Public Auto/taxi/bus drivers ₹50 (for autos/taxis),

Section 178
Transport Vehicle refusing service ₹200 (other vehicles)

Travelling Without a Passenger travelling

₹500 fine Section 178
Ticket without a valid ticket

Juvenile Offences

Offence Description Penalty Legal Provision

₹25,000 fine (on vehicle

A minor driving a
Driving by a Juvenile owner) + cancellation of Section 199A
vehicle
registration

Juvenile offender
Ban on Future Licensing ineligible for a driving No license until age 25 Section 199A
license

Commercial Vehicle Offences

Offence Description Penalty Legal Provision

Exceeding permitted ₹2,000 + ₹1,000 per

Overloading Section 194
vehicle weight excess ton

Operating Without a Transport vehicle

Fine or imprisonment Section 192A
Permit without a valid permit
 National Transportation Policy and Its Role in Insurance

● The National Transportation Policy (NTP), mandated under Section 66A of the
Motor Vehicles Act, 1988, serves as a strategic framework for ensuring an efficient,
sustainable, and safe transportation system in India. It integrates multiple aspects,
including road safety, public transport enhancement, sustainable mobility, and
financial security through insurance mechanisms.

● Insurance plays a crucial role in achieving the objectives of the NTP by providing
financial protection, compensating accident victims, and ensuring legal
compliance for vehicle owners. Together, the NTP and motor vehicle insurance laws
aim to create a safe and structured mobility ecosystem in India.

Objectives of the National Transportation Policy in Relation to Insurance

● The NTP and motor vehicle insurance laws work together to achieve:

● Road Safety Enhancement: Mandatory insurance ensures financial compensation for accident victims.

● Efficient Claim Settlement: Speedy compensation for road accidents through insurance frameworks.

● Reduction of Financial Burden on Government: Insurance funds help victims instead of relying solely

on government schemes.

● Legal Compliance: Ensures all vehicles on the road are insured as per Section 146 of the MV Act.

● Encouragement of Safe Driving: Premium benefits like No-Claim Bonus (NCB) incentivize

responsible driving.

Insurance for Public Transport Vehicles

• Commercial transport vehicles, including buses, taxis, and trucks,

must have comprehensive insurance.

• This covers passengers, pedestrians, and goods owners in case of

accidents.

Example:

• If a state transport bus meets with an accident, insurance covers

medical expenses, compensation for injured passengers, and
third-party liabilities.
No-Fault Liability & Compensation Schemes

• Section 140 & 163A of the MV Act: Victims receive compensation without
proving fault.

• Hit-and-Run Compensation: Under the Motor Vehicle Accident Fund, victims get
financial aid even if the offender is unidentified.

• Example: If a pedestrian is hit by an unidentified speeding vehicle and dies, the

Solatium Fund Scheme provides ₹2,00,000 to the victim’s family.

Road Safety & Traffic Management

• Stronger enforcement of traffic laws reduces insurance claims due to reckless

driving.

• Development of Intelligent Traffic Management Systems (ITMS) for AI-based

monitoring.

• Black Spot Identification & Road Engineering Improvements to reduce accident-

prone zones.

• Example: The Delhi-Gurgaon Expressway saw a 30% reduction in accidents after

installing speed cameras and lane barriers, leading to fewer insurance claims.

Sustainable & Eco-Friendly Transportation

• Promotion of Electric Vehicles (EVs) under the FAME Scheme, with insurance
incentives.

• Expansion of CNG, hydrogen-powered, and hybrid vehicles, reducing pollution

and insurance risks.

• Encouragement of cycling and pedestrian-friendly infrastructure.

• Example: Delhi’s shift to CNG buses reduced air pollution and lowered insurance
premium rates due to safer, eco-friendly transport.
Freight & Logistics Modernization

• Multi-modal transport hubs integrating road, rail, and waterways.

• Implementation of GPS-based tracking for freight movement and risk reduction.

• Expansion of National Highways & Expressways for faster and safer cargo transport.

Example: The Delhi-Mumbai Expressway has reduced logistics costs and improved
freight safety, leading to lower commercial vehicle insurance premiums.

Digitization & Smart Mobility

• E-Challan & Digital Insurance Verification prevent uninsured vehicles

from operating.

• Online Claims Settlement speeds up compensation for accident victims.

• Real-time Traffic Monitoring through GPS reduces accident risks.

• Example: Hyderabad’s AI-driven traffic management system reduced

signal violations by 20%, decreasing insurance claims for accidents.

Government Schemes Supporting NTP and

Insurance
Scheme/Initiative Objective

Bharatmala Project Expansion of expressways and national highways

Smart Cities Mission Intelligent transport solutions & better urban planning

FAME (Faster Adoption and Manufacturing

Promotion of electric mobility
of Electric Vehicles)

PM Gati Shakti Yojana Strengthening logistics and transport infrastructure

Motor Vehicle Accident Fund Compensation for hit-and-run victims

FASTag-linked Insurance Digital toll payments linked to insured vehicles

 Challenges in Implementing the National Transportation Policy & Insurance

● Many vehicles operate without valid insurance, especially in rural areas.

● Lengthy claim settlement processes discourage victims from filing insurance claims.

● Fraudulent insurance claims increase premium costs.

● Lack of awareness about mandatory insurance among vehicle owners.

● Slow Adoption of Digital Insurance & Smart Mobility: Many drivers and vehicle
owners are unaware of digital insurance benefits, leading to low adoption of online
policies and cashless claim settlements.

Motor Vehicle Accident Fund

● The Motor Vehicle Accident Fund is a government-established financial

mechanism designed to provide compensation to victims of motor vehicle
accidents, especially in cases where the offending vehicle cannot be traced
(hit-and-run cases). The fund is primarily aimed at ensuring that victims
receive financial relief, regardless of the identity or financial status of the
person responsible for the accident.

Section 163 - Scheme for Payment of Compensation in Hit-and-Run Motor Accidents

● This section empowers the Central Government to create a scheme for compensating victims of hit-and-run accidents, where the identity

of the vehicle or driver involved is unknown. The scheme is administered by the General Insurance Corporation (GIC) and defines how

applications for compensation are to be processed.

Administration of the Scheme:

● The scheme is notified in the Official Gazette and implemented by the General Insurance Corporation.

● It includes details on how victims can apply, the authorities responsible for processing claims, and the procedure to be followed.

Provisions of the Scheme:

● Punishment for Contravention (Sub-section 2(a)):

● Violation of the scheme may lead to imprisonment (up to 3 months), a fine (up to ₹500), or both.

● Example: If an insurance company refuses to follow the compensation rules laid down in the scheme, it can be penalized.
 Delegation of Powers (Sub-section 2(b)):

● The powers under the scheme can be delegated to other officers or authorities with the prior approval of the
Central Government.

● Example: If a State Transport Authority is authorized to handle claims, it can delegate certain responsibilities
to district-level officers.

Retrospective Effect (Sub-section 2(c)):

● The scheme can have retrospective effect from the date of establishment of the Solatium Fund under the
old Motor Vehicles Act, 1939.

● However, retrospective implementation should not harm any individual’s interests.

● Example: If a person was eligible for compensation under the Solatium Fund before the new Act came into
force, they can still claim benefits under the retrospective clause.

Section 163A - Special Provisions for Compensation on Structured Formula Basis

● This section introduces a structured formula-based compensation system, which allows victims or their legal representatives to claim
compensation without proving fault on the part of the vehicle owner or driver.

No-Fault Liability (Sub-section 1):

● Compensation is payable without proving negligence or wrongful act.

● The owner of the vehicle or the insurer is liable to pay compensation as per the Second Schedule of the Act.

● Example: If a pedestrian is killed in an accident involving a car, the victim’s family can claim compensation from the owner or insurer
without proving that the driver was at fault.

No Need to Prove Negligence (Sub-section 2):

● The claimant does not need to establish that the accident was caused due to negligence or fault of the owner or any other person.

● Example: If a motorcyclist suffers permanent disability in an accident, they can claim compensation without proving that the other
driver was responsible.

Revision of Compensation Amount (Sub-section 3):

● The Central Government can revise the Second Schedule from time to
time to adjust for the cost of living.

● Example: If inflation increases significantly, the government may raise

the compensation amounts to match the rising expenses of medical
treatment and livelihood loss.
THANK YOU!!!