Car and Bike Insurance Buying Guide: Not Having Vehicle Insurance can cost Dearer than you Imagine

India is a big country with a dense population. Nowadays nearly everyone utilizes private vehicles for commutation. An average Indian spends roughly one hour driving each day, depending upon distance and road traffic. In metro centers such as Mumbai, Delhi, Pune, Kolkata, Bangalore, people frequently need to cover long distances in a private vehicle such as Scooter, Motorcycle, or car. Driving comes with many intrinsic costs such as fuel, washing, maintenance, Highway tolls, PUC, insurance, and countless more.

Insurance is relatively crucial because of its esoteric obligations if someone forgot (or ignored) to purchase car or bike insurance and, more specifically, Third Party Insurance (T.P.Insurance). Several people assume that buying insurance for a vehicle is confined to cover coincidental damage to your motor vehicle or avoid traffic Police fines. We must educate you that insurance is a lot more than that.

There are many Types of Motor Vehicle Insurance Available. In India, as per the Motor Vehicle Act, third-party insurance is mandatory. It is a punishable offense not to have a third-party insurance policy for your vehicle. You can buy your own damage insurance (O.D. Insurance) at your discretion. A Motor Insurance policy is essentially a T.P. Insurance policy, and it becomes a comprehensive policy when you include Own damage protection in it. Own damage protection means your insurance company will protect you from pre-specified damage caused to your vehicle during an accident.

As per Law, no one can ply any motor vehicles without valid and effective third Party insurance. A T.P. Insurance means the insurance company will cover accidental injury, disability, death of any other person or any third party property damage. Suppose you injure someone while driving your vehicle. In that case, the insurance will cover the cost of medication and hospitalization. In the worst case, if that other person dies in that road accident, the insurance claim will be payable to the legal heirs of the deceased as compensation determined by a competent court.

Now you must wonder why to be worried about the cost of hospitalization of someone you don't even know and why you have to pay a premium for providing insurance cover to a Third Party.

The truth is, this is not merely a moralistic responsibility to bear the hospital expenses of an injured or deceased. Still, it is instead a Legal Liability, and to your surprise, this legal liability may hammer you with a financial burden heavier than you can envision.

A financial liability incurred in a road accident case may vary from a few thousand to many crores, excluding interest and cost. Competent courts decide this amount of liability, and liability depends upon hospital expenses, income, age, dependents, and many other factors specified by statutory law, precedence, and merits of each case.

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It is pertinent to mention here that even if you are not negligent in causing the motor accident, there are still chances to pay the entire compensation because of section 144 and 163 A of Motor Vehicle act, 1988. As per these sections, the third party need not prove your negligence to claim compensation.

Now imagine, you decided to save money on Third Party insurance and drove your car on the road without insurance. Your vehicle ran over a roadside walking man, aged about 31. He dies on the spot—a married man with two children and working in an I.T. firm earning 15 lakh per annum. As a rough idea, your liability will be about 1.5 crores or more. This amount has to be paid by you because there is no insurance company to pay for compensation. All your financial planning is doomed.

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When your vehicle is covered with a third party insurance policy, the insurance company undertakes to provide you protection from all third-party liability including but not limited to simple injury, permanent disability (PD), death and third-party property damage (TPPD).

This liability can also be imposed upon you when you give your vehicle to someone else, and that person causes a road accident. Being the owner of such a vehicle, you are jointly liable to pay compensation in a third-party claim.

You can very well perceive that mere third-party insurance can shift a vast, unpredictable financial burden from your head and save you from a near-bankruptcy situation. So always remember an T.P. Insurance policy is a lot more than a piece of paper that protects you from traffic police fines.