Despite compulsion, more than 50% of vehicles in India run without insurance, according to the government. The government revealed this in response to a question from the Parliament. In answer to a question from Lavu Sri Krishna Devarayalu, Minister of State for Finance Bhagwat Karad, it is stated that there are 30.5 crore vehicles on Indian roads. This is based on information from the Ministry of Roads and Highways, which excludes MP, AP, and Lakshadeep. 16.5 crore of these vehicles, or 54%, are not insured.
Karad was responding to Lavu Sri Krishna Devarayalu’s query about whether it is accurate to say that 40–50% of all vehicles in India lack insurance.
Additionally, on whether the government has set a deadline for implementing a mechanism requiring motor vehicle owners to purchase third-party car insurance online coverage on the spot and, if so, what those details would be. Karad informed the Parliament that such a proposal has yet to be considered.
In India, third-party motor insurance is required. Although many vehicles still lack insurance. Thousands of families are forced below the poverty line each year due to accident victims’ inability to obtain adequate compensation due to a lack of motor insurance.
The insurance regulator has been talking about several ways to insure uninsured vehicles. To ensure complete coverage, the industry regulator IRDAI suggested that insurance companies work with state governments and compare information from regional transport offices with information on insured vehicles. #
The low penetration of car insurance online in India is attributed to various factors, including the non-renewal of motor insurance policies. Many vehicle owners either forget or choose not to renew their policies, leaving many without insurance coverage, leading to major issues for a car insurance claim. *
The Insurance Regulatory and Development Authority (IRDAI) has proposed a solution in response to this issue. They suggest allowing long-term motor insurance policies to provide policyholders with more options and simplify the renewal process. These long-term policies come in two variants: #
- 3-Year Policy for Private Vehicles: The regulator has recommended a 3-year motor insurance policy for private cars. This policy offers coverage for three consecutive years, eliminating the need for annual car insurance renewal. Policyholders can have peace of mind knowing their vehicles are insured for an extended period. *
- 5-Year Policy for Two-Wheelers: The proposed policy is even longer, extending to 5 years. Like the 3-year policy for private cars, this 5-year policy aims to streamline the insurance process for two-wheeler owners and enhance compliance with motor insurance requirements. *
Importantly, these long-term policies run concurrently with the mandatory third-party liability coverage, ensuring that all vehicles on the road are financially responsible in case of accidents involving third parties.
Introducing these long-term motor insurance policies is expected to increase compliance and reduce the number of uninsured vehicles. This, in turn, can improve road safety and financial security for vehicle owners in India. It’s a step towards addressing the low penetration of motor insurance and promoting a culture of responsible vehicle ownership. *
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