With the Mandatory 5-year insurance in place, motorcycles are getting a price hike from anywhere between the range of Rs 3,000 to 10,000. The rule suggests that a third party insurance should be compulsory for all Two-wheelers for 5-years, from the moment they are purchased. There are Pros and Cons of this move. So let’s discuss them one by one. Pros of mandatory Third Party Insurance-
One of the crystal clear benefits of this rule is financial assistance. Third party insurance covers the accidental damage done to the victim. So if you hit a pedestrian with your bike, then they will get financial compensation. Same is true if the accident involves two bikes. Both of them will have a third party insurance and thus they will be compensated by each other’s insurance money. It is economically beneficial because the third party insurance is relatively cheaper than the first-party one. And if everyone will have a third party insurance then it’d be equivalent to everyone being insured by the very people who accidentally hit them.
Cons of mandatory Third Party Insurance-
There are some serious cons to it if the implementation of this rule is not followed strictly. Since the rule has just come into effect since September 2018, there are almost very few vehicles with a 5-year third party insurance. So, it’d be a long time until bikes on the road become imbued with this third party insurance.
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Currently, the most common form of insurance is First-party insurance and it only covers the damage done to the owner. So if a bike bought in Sept 2018 gets in an accident with a 1-year-old motorcycle, then the third party insurance of the new bike and the first party insurance of the old bike will only cover the accidental damage done to the owner of the old bike. It is a very inherent flaw because unless everyone has a third party insurance, which would take some time, this move is not going to show it’s full positive effects.
By: Yetnesh Dubey