Know the Fine for Driving Without Car Insurance in India

Everyone aspires to own a car of their own. It is considered as one of the major milestones in a person’s life. For most people, months of planning and savings may culminate into owning a car. But merely owning a car is not enough. With buying a car, comes the moral responsibility for using it safely and owning a car insurance policy. If you drive an uninsured car around, you may have to face dire consequences inclusive of paying a motor vehicle fine or chalan.

Before discussing the fine and consequences of driving a car without valid insurance, let’s first understand what car insurance is all about?

What is Car Insurance?

Car insurance is a motor insurance policy for cars that protect them against any sudden and unpredictable loss or damages arising out of accidents, third party liabilities, natural calamities, fire, manmade hazards, theft, etc. In other words, it is a contract that legally binds a motor insurance provider to compensate for any loss or damages caused to or by the insured car to third parties.

As a car owner, you can purchase car insurance online as well as offline as per your preference and convenience. Car insurance can be bought offline with the help of an agent or by contacting the branch of the insurance company. On the other hand, car insurance online can be purchased from the motor insurance company or by visiting the website of online insurance brokers, such as Policybazaar Insurance Brokers Private Limited (formerly known as Policybazaar Insurance Web Aggregator Private Limited).

Types of Car Insurance Plans

Based on the nature of coverage, car insurance is of two types – comprehensive car insurance and third party liability car insurance. Third party liability insurance refers to the car insurance that covers only third party liabilities of the car owner in the event of causing accidental death, bodily injuries or property damages to a third party.

Comprehensive car insurance refers to all-inclusive car insurance that not only covers the third party liabilities of the car owner but also provides coverage for any loss or damages sustained by the car resulting out of the fire, accidents, natural disasters, theft, manmade hazards, etc. Moreover, a comprehensive car insurance policy also compensates for accidental death or disability of the owner-driver of the car.

Car Insurance is Mandatory in India

In India, owning a car insurance policy is a legal mandate for all car owners. As per the Motor Vehicles Act of India 1988, every car owner in India needs to have third party liability insurance cover for his car to legally drive it on public roads. This means you need to have a motor insurance company covering your accidental third party liability claims.

However, it is not compulsory to buy a comprehensive car insurance policy. But if you have comprehensive car insurance, you are not required to purchase third party car insurance separately. This is because comprehensive car insurance is inclusive of third party liability cover.

But why only third party liability cover is mandatory for car owners in India. That’s because third party liabilities arise due to causing property damages, bodily injuries or death of a third party person in an accident caused by your car. Since the damages or injuries have been caused by your car, you will be legally required to pay compensation to the affected person or victim. The compensation amount depending on the extent of damages and status of the victim may cost you crores of rupees. Without a third party car insurance policy, you may have to pay the compensation from your own pocket. It may result in your bankruptcy if you cannot afford the compensation amount.

To avoid suffering from such a major financial loss and turn bankrupt, the government has made third party car insurance a mandatory requirement for all car owners in India.  

Consequences of Driving Without a Valid Car Insurance Policy

Every law has a provision for violators and the motor vehicles law is no different. As per the Motor Vehicles Act, 2019, driving a car without a valid third party insurance cover is punishable in the eyes of the law. Take a look at the consequences of driving a car without a third party or comprehensive car insurance policy:

Pay Fine/ Get Imprisoned

If you are caught driving a car without a valid car insurance policy comprising of third party liability cover, you may attract a heavy fine. As per section 81 of the recently amended Motor Vehicles Act, 2019, people found driving a car without a third party insurance cover will be liable to pay a fine of Rs 2000 or spend up to three months of imprisonment on their first offence. In the case of the second offence, the car owner will be legally bound to pay a fine of Rs 4000 and/ or spend up to three months in jail.

Pay for Third Party Losses

If you unintentionally cause an accident, you may end up damaging the property of a third party or harming someone else. In some cases, the accident can lead to the death of the third party involved. In case you have caused bodily injuries or death or property damages to a third party in an accident, you will be legally liable to pay for the losses incurred and compensate for the lives lost.

All motor insurance companies have the obligation to pay for third party liabilities of the insured car owners. So if you have a car insurance policy with third party cover, the financial losses will be borne by your motor insurer. But without car insurance, you will have to pay all the money on your own, which could be quite high. Moreover, if the person injured succumbs to his injury, the compensation amount can increase manifolds.

Pay for Own Damages

If you meet with an accident where you are at fault, not only can you cause damages to a third party but also your own vehicle. Without a car insurance policy, you will have to bear third party liabilities as well as pay for the damages sustained by your own car. As a result, your losses will automatically get amplified and can result in financial distress.

But if you have comprehensive car insurance, you will not have to worry about any of this. A comprehensive car insurance policy comprises of both third party liability cover and own damage cover. Thus, your motor insurance will pay for the damages sustained by your car as well as for third party liabilities if you had purchased comprehensive car insurance online or offline.

No Compensation for Personal Accident

A car accident can result in serious injuries to the driver of the vehicle besides damaging his car and causing third party liabilities. In several cases, the accidental injuries result in the death or disability of the owner-driver of the vehicle. In the absence of a car insurance policy, a sudden financial burden will fall on the family of the car driver if he dies or gets disabled. But if the owner-driver of the car owns car insurance online with personal accident cover, his motor insurance will compensate for his accidental death or disablement.

Lose No Claim Bonus

If your car is not protected under insurance then most likely your car insurance policy has expired. If you don’t renew your policy within 90 days of the previous car insurance policy expiry date, you may lose your No Claim Bonus which will restore to zero. This bonus can be used to save on premiums at the time of policy renewal and can be accumulated upon every claim-free policy year.

Face Legal Actions

Going against the law can result in legal complications. If you are found driving a car without a valid insurance policy, you may land yourself in some legal complications. You may be taken to the court by the third party victim or your car or your driving license may be confiscated or suspended under certain cases. Not only are these situations unpleasant but may also attract legal expenses and increase your losses.

Tips to Avoid Getting Penalised for Driving Without Car Insurance

Here are some tips that can help car owners to avoid penalised for driving an uninsured car:

• Buy car insurance online as soon as you buy a new car or a second-hand car
• Renew your car insurance online before the existing policy expiry date
• Store a hard copy of your car insurance policy in your car
• Keep a soft copy of your car insurance policy in your phone and your email

In a Nutshell

Driving a car without a valid insurance policy can be a really bad idea. Not only does it poses a threat of third party liabilities but also attracts heavy fines if caught. Thus, make sure to only drive a car with at least third party car insurance to avoid paying any penalties.