Why is Motor Vehicle Insurance Mandatory in India ?

Motor vehicle insurance is mandatory in India for a number of reasons. It becomes all the more important considering the high number of motor vehicle accidents that take place in India, and the mounting number of accidents is a figure to be concerned about.

What is the Motor Vehicles Act? 

In India, as per the Motor Vehicles Act, it is mandatory that all vehicles that operate in any public space must have a motor vehicle insurance cover. Policyholders must have at least ‘third party liability’ motor insurance cover even when opting for the basic insurance plans.

The third-party cover is essential in the event of an accident caused by the vehicle owner or another person driving the other vehicle. It is important to note that vehicle insurance coverage may or may not cover damages caused by the owner.

What Does the Motor Vehicles Act State?

The Indian Parliament amended the Motor Vehicles Act of 1988 that reviewed all aspects concerning transport vehicles and was implemented on 1st July 1989. The act lists out the various provisions related to licenses of conductors, licenses of drivers, registration of vehicles, controlling vehicles using permits, traffic rules, liability, offenses, insurance covers, and penalties.

For this reason, all vehicle owners are urged to carry their motor vehicle insurance documents with them at all times. However, the question that most people often wonder about is why motor insurance mandatory, which often goes unanswered.