Necessity for insurance against third party risk :

Section 146 of the above Act states that no person shall use, other than as a passenger or allow to use a motor vehicle in a public place unless a policy of insurance which covers the liability to third party on account of death or bodily injury to such third party or damage to any property of a third party arising out of the use of the vehicle in a public place. Therefore, it is mandatory for the owner of any motor vehicle to obtain, at the minimum, a policy from any General insurance company holding a valid licence from IRDA, which covers the risk of death or bodily injury to a third party arising out of usage of the vehicle in a public place.

The liabilities which require compulsory insurance are as follows:

(a) death or bodily injury of any person including the owner of the goods or his authorised representative carried in the carriage

(b) damage to any property of a third party

(c) death or bodily injury of any passenger of a public service vehicle

(d) liability arising under the Workmen’s Compensation Act, 1923 in respect of death or bodily injury of the paid driver of the vehicle, conductor or ticket examiner (public service vehicles) and workers carried in a goods vehicle

(e) The limit of liability to third party property is `6,000.