The General Insurance (GI) Council has proposed a new formula for determining the third-party (TP) motor insurance cover. In meetings with the Ministry of Road Transport and Highways (MoRTH), it suggests that the general insurers’ liability be capped at Rs 10 lakh and the balance amount be paid from the Motor Vehicle Accident Fund. At present, there is unlimited liability as far as motor TP insurance is concerned. This means that if there is a death due to road accident, there is no upper limit on the compensation paid out.
The Council has proposed that a fuel cess be imposed on petrol/diesel purchased by customers, which would flow into the accident fund. MoRTH currently has a committee in place, with representatives from the general insurance companies, Department of Financial Services and insurance regulator IRDAI.As per The Motor Vehicles Act, 2019, the Centre was to prescribe a base premium and the liability of an insurer for TP motor claims in consultation with the Insurance Regulatory and Development Authority (IRDAI).
