Free ride for motor cover users to end

The free ride enjoyed by motor insurance claimants is set to end, with the government deciding to fix some loopholes in the policy.

Under the new norms, expected to be functional by the end of this year, third-party claims for road accidents will be capped at Rs 10-15 lakh (Rs 1-1.5 million).

At present, there is no cap.

"If the person driving the vehicle is at fault, the claim in the event of death could go up to Rs 15 lakh.

"If the driver is not at fault, Rs 10 lakh could be the maximum amount that could be claimed," said an official of a general insurance company.

The average third-party claim per accidental death is Rs 300,000.

For injury, it is Rs 100,000.

Though cases of high claims are few, in some cases claims have gone up to Rs 20 lakh (Rs 2 million), depending on the profile of the affected person.

The government will also stipulate that claims have to be filed within three years of the accident.

At present, there is no such limit.

These changes are based on suggestions by the insurance regulator.

A Bill incorporating these changes is expected to be tabled in the next session of Parliament.

An insurance expert says this is a good move, as some people delay filing claims to increase interest payments.

"There is an incentive to delay filing of claims. Apart from higher interest

payments, this makes investigation difficult. A time limit will ensure prompt filing," said the expert.

Another suggestion is that the claim should be decided in the jurisdiction where the accident takes place.

This means if the accident has happened in Maharashtra, the claims filed will be under the jurisdiction of the state authorities.

At present, claims can be filed from anywhere in the country.

This means if an accident takes place in Maharashtra and the claim is filed in Delhi, the case falls under the jurisdiction of the Delhi authorities.

"This an important amendment as there has been a tendency among people to file claims from places from where claims tend to be higher. This is particularly true in some large cities where there is a nexus between advocates and agents.

"In such cases, advocates delay the case and claim a higher amount. In return, they charge extra commission from the claimant," said the export.

Last year, the surface transport ministry formed a 10-member committee under the chairmanship of S Sundar, a former secretary, to prepare a report, based on which the archaic provisions of the Motor Vehicles Act, 1988, were to be overhauled.

The committee submitted its report last month. It has incorporated these three changes pertaining to motor insurance.