The Financial Implications of Not Having Car Insurance

The Financial Implications of Not Having Car Insurance

Not having a car insurance could spell trouble for you. Let’s find out the different consequences you might face for driving minus a valid car insurance cover.

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Zooming around in a shiny new car, whizzing past all others is a dream every person would cherish. Also, in the present times, having a car has become a necessity due to the long commutes involved on almost a daily basis.

But, owning a car comes with its own conditions, one of them is having a car insurance. What if you forego buying it? The thought is tempting but what would be its consequences?

Read on to learn about what would be the financial implications involved when not buying a car insurance for your prized possession.

The Law..

The Motor Vehicles Act, 1988, is an act by the Parliament of India which is responsible for regulating all the aspects of road transport vehicles. It states that for every car to ply on the roads, it is mandatory to buy a car insurance. The on-road price of the car is generally inclusive of the insurance premium of the car.

Reportedly, as per a national survey, about 70% of the vehicles on the Indian roads are without insurance.

Listed below are some financial implications of the same.

Heavy fines

With the rising cost of living and the ever-increasing fuel prices, coughing up a good sum of money for upkeep and maintenance of the car would seem like an additional unwelcomed burden to begin with. However, not buying one would anyway add up to your expenses. How?

You are bound to be penalised heavily if caught without having car insurance. As per the Road Transport and Safety Bill, 2014, the bill penalizes the driver heavily if he/she is caught driving without a valid insurance cover. As per amendments, the fine for light motor vehicles is INR 25,000 and INR 75,000 for other motor vehicles. Better to shell out for an insurance rather, eh?

Pay losses for third party damages

As per the Motor Vehicles Act, 1988, third-part insurance is a statutory requirement. The idea of the third party originates from the fact that the prime beneficiary of the policy is neither the insured person nor the insurance company, but a third-party.

Third party insurance comes in handy when your vehicle crashes with another – which might result in either damages or death or both.

In such a case, the third party can claim for his/her compensation. In such a case, your car insurance mandatorily covers this third-party liability and spares you the losses incurred. In the absence of a valid insurance cover, you would have to bear the losses instead. If the person dies, your liability would be very high. In case you find yourself in such a soup, it is better to buy a third-party insurance instead of letting your hard-earned money go down the drain paying the accidental damages of someone else.

Pay losses for your own damage

Coming to your own car, what if your own car gets damaged in an unfortunate accident? While it is mandatory to pay losses caused to a third party, how about your own losses? This is where comprehensive car insurance comes into the picture.

Comprehensive car insurance policies cover for damages incurred by your own car. If at all you find yourself in such a situation, the expenses incurred would be borne by the insurance company as opposed to you. Comprehensive cover serves you in both cases wherein the accident is your fault or when someone has hit your car and left while you were away.

Comprehensive cover gives you the required peace of mind where your car is concerned and you can choose the cover you wish to opt for.

Face legal trouble

Apart from the financial loss suffered in an accident which has caused damage to a third party and/or self, you might end up inviting legal trouble if your car is found without an insurance cover.

As a penalty, you can have your driving license suspended. In addition, your vehicle’s registration can be suspended and you can also be fined for INR 3,000 and imprisoned for three months.

Conclusion

Always remember that car insurance is necessary, both for your own well –being and for the well-being of other drivers. There is a reason car insurance is typically mandated by the law, and a genuine one at that. So, if you’re a proud owner of a car, buy a car insurance right away to protect that precious pal of yours!

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