The Motor Vehicles (Amendment) Bill was introduced in the Lok Sabha last Friday, the highlight of which is that from hereon, insurance companies will not pay any third-party compensation awarded by the Motors Accident Claims Tribunal in cases of drunken driving.
This particular clause is bad news for most citizens. As it is, insurance companies are most reluctant to pay out to the beneficiary, even when a claim is absolutely legitimate.
More often than not, one has to run from pillar to post, even knock at the doors of the consumer court, to receive one’s legitimate claims. In fact, often the process of having to go to the consumer court diminishes the award significantly on account of the steep charges of the lawyers.
And then, there are instances when the insurance company routinely challenge the consumer court award in a higher court, forcing the claimants to spend more and more of their money, or give up. But that is an altogether different story.
Prima facie it may seem reasonable that the insurance companies ought not to have to pay for the damages caused by drunken drivers.
Any vehicle insurance cover has three components: Third Party Liability, which protects one against property damage or bodily injury one does to others; Accident Benefits, which compensate for some degree of income replacement and medical expenses for the driver, passengers in the insured vehicle or pedestrians who may be involved in the crash, irrespective of who was at fault; and Physical Damage, which covers for collision and comprehensive damages.
Collision damages are the damages arising from the collision to the driver’s vehicle while the comprehensive damages protect the owner against numerous perils including fire, theft, flood and hail.
A case may be made out for the drunken driver not to be compensated for the losses suffered by them, irrespective of the financial status of the drivers. But what about the third parties who may be the victims of such drivers? What if the driver, a professional cab driver for instance, is entirely incapable of paying any compensation to the third party? Why should the third party who was hit by a very poor driver go without compensation, while if the same party were hit by a Bollywood star, compensation would be forthcoming? What kind of a Russian Roulette is this for the common man?
At the very least, shouldn’t the Bill have provided for the insurance compensation (the bill has capped it at Rs 10 lakh for death and Rs 5 lakh for loss of a limb) to be paid to the third party without demur, creating appropriate processes for the insurance company to recover the amount from the owner of the vehicle driven by the drunken driver, say the cab-aggregator or any other owner?
The answer to drunken driving cannot be to deprive citizens of their due compensation from a driver, drunk or not. It is not their fault that they were hit by a drunk driver. It is the government’s fault because their enforcement mechanism is too feeble to keep such drivers off the roads. And yet it is the public that is expected to pay for it.
The bill ignores this important point. In most countries, vehicle insurance is typically accompanied by a list of names as to who can drive that vehicle, the third party insurance is fairly comprehensive, so that the liability coverage stands in place even if the accident occurred under the influence of alcohol. Of course the clause makes the insurance a little more expensive.
British example
In Britain, for instance, a car insurance premium depends on the age and the driving record of a specific individual who is named as the ‘driver’ of the insured car. If more than one driver is named as the driver of the car, the premium goes up. The insurance companies do not have to pay up any compensation only if the accident is caused by a driver who is not named in the policy, drunk or not. In such countries, drunk driving (and speeding etc) gets you not only a suspension or cancellation of licence, but it also increases your insurance premiums the next time.
But our RTOs are notoriously lazy and corrupt (I do not use this statement loosely). They are loathe to use the prowess of IT to go that extra mile to name the licensed drivers of a private car, or provide online facility to add names, necessitated by changing one’s driver by providing specific driving licence details, for example. Much of the formalities have to be face to face because that’s the way they make money.
After all, most Indian systems are designed for the comfort of the “service providers” and not the seekers of service. For instance, why else would we have to repeatedly pay life-time taxes every time we are transferred from one state to another, without ever being actually able to get a refund of the balance of the previous life-time tax? Why are they too lazy to have a clearing-house mechanism of their own for incoming and outgoing vehicles?
The second point the bill disregards is that the drunk drivers are out there on the roads in numbers, because the government has dismally failed to keep them off the roads.
The probability of catching the culprits has historically been abysmally low and the consequence of being caught is virtually negligible. Endorsements of drunken driving or speeding or traffic rule violations cannot form a relevant detail in setting the premium of car insurance, because no driver’s name is associated with a car.
But if the insurance is to be linked to the identity of the vehicle and not the drivers, it is a decision of the government and there seems little case to load the cost of this incompetence on the common man. Let the insurance companies not pay for the damages suffered by a car driven by a drunk or for his life or limb, but let not the innocent citizen suffer, just because the government failed to keep that drunk from driving the car.
(Raghunathan is an academic and author)