Move to cap accident relief at Rs 15L

A proposal by the Ministry of Road Transport and Highways suggests limiting of the compensation given to the kin of road accident victims to Rs 15 lakh.

As a relief to insurance companies suffering huge losses in third-party motor insurance claims, the ministry has suggested capping the liability of general insurers at Rs 15 lakh for road accidents.

In the draft Road Transport and Safety Bill, the Ministry says that “provided that the maximum liability for compensation to a victim by the insurer linked to the regulated minimum premium shall be a sum of Rs 15 lakh or such higher amount as may be prescribed by the Central government from time to time.”

This means the maximum amount payable to any individual or family in cases of accident or demise is Rs 15 lakh. The bill will come up in the ongoing Parliament session.

At present, the Motor Vehicles Act, 1988, empowers the Motor Accident Claim Tribunal (MACT) to decide the compensation that insurers required to pay on third party motor accident claims based on age, income, health, dependants of the accident victim.

Currently, there is a limit on liability. However, insurance firms have been demanding the Centre to impose cap on liability, saying they have been suffering losses by paying huge compensation.

The companies also said that they have been shelling out about Rs 10,000 to Rs 12,000 crore a year as third party motor insurance.  There are instances where some courts have awarded up to Rs 2 crore compensation to accident victims.

Criticising the move, S P Singh, senior fellow at Indian Foundation of Transport Research and Training, said cap on the liability is unfair to road accident victims.