Govt notifies ten-fold increase in compensation for motor accident victims The government has increased ten-fold the minimum compensation payable to road accident victims or their kin in case of death, permanent disability or minor injury irrespective of their income and age criteria. The decision by the transport ministry comes after a gap of 24 years since the last revision was in 1994.

Even though the compensation is fixed, the people are free to pursue their case in the Motor Accident Claims Tribunal (MACT) if they believe they deserve higher compensation.

Section 163A of the Motor Vehicles Act, 1988 allows you to claim compensation for death, disability or injury without having to prove that the accident was a result of the negligence of the other party. In other words, it allows you to claim compensation for ‘no-fault liability.’

In case of death, the compensation is fixed at Rs 5 lakh. In case of disability, the compensation is Rs 5 lakh multiplied by disability proportion as per Schedule 1 of the Employee’s Compensation Act, subject to a minimum of Rs 50,000. In case of minor injury, the compensation has been set at Rs 5,000.

The specified compensation amounts shall be hiked by 5% per annum from 1st January 2019. This increase in compensation amount may affect third-party motor insurance premiums. However, these amounts are fixed by sector regulator IRDA every year, rather than being market-determined.

The current notification brings the compensation amounts more in line with present-day expenses and costs. The notification shall go into effect from the date that it is published in the Official Gazette.

In practice a large number of vehicles plying on Indian roads have no third-party insurance or their insurance has expired. In a recent interview with RupeeIQ, Tapan Singhel, MD and CEO of Bajaj Allianz General insurance, indicated that the percentage of two-wheelers which have mandatory third-party insurance could be as low as 20%.

Staff Writer

This article is written by RupeeIQ editorial staff.