INSURANCE OF MOTOR VEHICLES AGAINST THIRD PARTY RISKS

Abstract

Insurance is a contract between two persons, an insurer and insured; it is where one person indemnifies the other on payment of consideration which is the premium in the event of happening of uncertain events. There are many kinds of insurances and motor vehicles insurance is one of them and is governed by the Motor Vehicles Act 1939 which later amended in 1988.

These days with the rise in vehicles plying on roads, there has increased the chances of more road accidents. The injured persons- peddlers, rickshaw pullers, other car owners having suffered the damage, claim against the offending motorist. But in many cases the motorist of the offending vehicle is not in a condition to pay to the injured or has no means to pay, this makes the situation worse and injured person is left helpless and cannot recover. To solve this problem England came up with the compulsory third part insurance. Indian statute has been established on the lines of many English statutes. Now every vehicle plying on road has to have compulsory third party insurance so that the insurance company can indemnify the insured against the claims made by the injured person. This was done so that the injured person should not suffer in case the motorist fails to pay to the injured. Under such situations the insurer indemnifies the insured against his liability to third parties. Insurer becomes liable to pay only when the insured’s liability is determined.