Things to remember when filing third-party motor insurance claims

Every other day we come across reports of a vehicle knocking down a pedestrian causing either disability or death. Though thirdparty insurance cover is a mandatory requirement for Indian vehicles and can be utilised in such cases, not many seem to have clarity on how to make a claim when they or their vehicle is hit by another vehicle.

A typical motor insurance policy consists of two distinct covers. One to cover damage to the vehicle or its owner/paid driver, and commonly known as 'own damage cover". The other, known as 'third party insurance', covers the owner against legal liability owing to death or injury to any person or damage to any property caused by the vehicle.

Third party claims are necessarily adjudicated by constituted tribunals (Motor Accident Claim Tribunals) to provide compensation to the victims (the injured, the dependants of the deceased or owner of the damaged property). Adjudication is by virtue of a decree on merits or through a consent decree.

In accordance with the Motor Vehicles Act, 1988, a motor third party claim can be filed by the affected persons in a tribunal at the place of accident, at a place where the victim or his dependants ordinarily reside or where the owner of the vehicle or the driver involved ordinarily resides.

In order to substantiate the accident during the course of adjudications by the claimant (the injured, the deceased or owner of the damaged property, as the case maybe), it is necessary that a complaint is filed with the police, recording the incidences of the accident and other relevant facts.

In accordance with the Motor Vehicle Act, 1988, a third party claim can be made under the categories of "nofault liability claims" or "fault liability claims". In case of claim adjudications under no-fault Liability, the claimant is under no obligation to allege and prove negligence/omission on the part of the vehicle that caused the accident. In such cases, the compensation entitlement of the claimant remains restricted to the structure and quantum defined under the Motor Vehicles Act, 1988. However, in a claim preferred under fault liability, the claimant attributes and proves the negligence/omission on the part of the vehicle that resulted in accident. In such events, the compensation entitlement of the claimant becomes unrestricted and depends upon physical factors such as the residual human asset value or loss of earnings owing to any disability caused by the accident.

The only exclusion to this is a third party property damage claim. In accordance with the prevailing structure of the tariff product, the insurers' liability is restricted to a maximum sum of Rs 7.5 lakh. This would not mean that claimant's entitlement would also be restricted to said sum. Any amount more than Rs 7.5 lakhs is expected to be borne by the vehicle owner. Similar to any other insurance structure, a customer needs to adhere to the terms and conditions required in filing a third party claim.

(The author is Chief, Underwriting and Claims, ICICI Lombard General Insurance)