Mandatory Motor Vehicle Insurance :
There are situations where an accident caused by Motorist may result into the injury or death of a third party. Such third party may be a pedestrian walking on the road or who is knocked down by the motor vehicle or a passenger who is travelling in the vehicle. Similarly the motor accident may also result in the damage to the property of a Third Party.
In the earlier days, such third persons were not able to get any compensation as the motorists did not have enough resources to compensate them and the insurance policies also did not provide for the insured to compensate these victims of accidents.
This anomaly was removed with the enactment of Motor Vehicle Act 1988 which provides for mandatory insurance against Third Party Risks.
Thus while the Insurance against damage to motor vehicles caused by an accident is not mandatory the insurance of third party liability arising out of use of motor vehicles in public places is made mandatory. Accordingly no motor vehicle can ply in a public place without such Third Party Insurance.
