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The motor vehicle is one of the most important assets in one's own life. It is purchased for their personal travelling or carrying third persons for hire or reward and transporting goods. Owning and Driving a vehicle viz., two-wheeler motorcycle/scooter, three-wheeler auto, four-wheeler car/zeep, bus, lorry and any other vehicle is a most important factor in our life., without which one cannot sustain in the present-day lifestyle. Safe driving by following traffic rules makes us reach our destination safely. However, rash and negligent driving come with its own perils.

Cases of road accidents which is leading to multiple injuries over the body, deaths and damages to vehicles and property are reported in the newspapers/news channels on a daily basis. Getting treatment to the injuries is a costly affair. For all these, the owner of the vehicle which is responsible for the accident is liable to pay compensation to the driver engaged by him, passengers in the vehicle, pedestrians on the road and also the passengers in the other vehicles. The Motor Vehicles Act, 1988 stipulates that no vehicle should ply on the roads without valid motor vehicle insurance policy to protect the interest of third parties.

The prominent reasons why one should get the motor vehicle insured.

(A) TO GET THE VEHICLE REPAIRED:

Your vehicle may be involved in an accident and get damaged due to your own negligence or someone else's negligence. Your vehicle may collide with another vehicle. Or, you may swerve your steering to avoid collision with any other vehicle, walker or any animal while you are driving and there is every possibility of dashing a tree or road divider etc. or falling into a ditch and thereby causing severe damage to the vehicle. Getting the damaged vehicle repaired is a very costly affair. However, if you have taken motor insurance policy, you need not pay for these repairs by yourself. The insurance company will bear the said expenditure.

(B) To avoid liability to third parties:

If any accident is caused due to negligent driving of the vehicle, the owner of the vehicle is liable to pay compensation to the injured person or the legal heirs of the died person in the accident.

Quantum of compensation to be paid to the injured or legal heirs of the deceased does not depend upon the nature of vehicle liable for accident or his financial capacity. Quantum of compensation depends on the nature of injuries sustained by a person and in case of death of a person, the income of the deceased person. You may be the owner of the small moped, scooter, motorcycle and your income may be very meagre, but if your vehicle is responsible for any death of any walker on the road you have to pay the huge amount towards compensation to the dependant family members of the deceased depending upon his annual income. You may not be knowing who he was and what his income was. Example: the deceased may be an Engineer, doctor, advocate, government employee, businessman, student of professional courses etc., As per the settled principles of law laid down by the Hon'ble Supreme Court in various reported cases, you are liable to pay compensation under various heads, which are:

(i) Loss of Future Income-CALCULATED.
(ii) Loss of Consortium to the wife-Rs.40,000/-
(iii) Loss of love and affection to the children-Rs.40,000/- to each of children.
(iv) Loss of love and affection to the Parents-Rs.40,000/- to each of the parent
(v) Funeral and Transport Expenses: Rs.25,000/-

CALCULATION OF LOSS OF FUTURE INCOME:

(i) Ascertain annual income of the deceased as per his earnings.

(ii) From the ascertained annual income, deduct personal expenditure of the deceased. If the deceased is a bachelor, ½ income should be taken towards personal expenditure. If the deceased is a married person and has less than three dependants, deduct 1/3rd of the income towards personal expenses. If the number of dependants is 4-5, deduct 1/4th of the income towards personal expenses of the deceased. If the dependants are more than 5 dependants, deduct 1/5th of the income towards the personal expenses.

(iii). To the calculated income as stated above, add future prospects of the deceased, as follows:

If the deceased is a permanent job holder and aged below 40years, 50% of the income should be added towards future prospects; aged between 40 to 50 years, 30% of the income should be added towards future prospects; if aged more than 50years, 15% of the income should be added towards future prospects.

If the deceased is a self-employed person or having a fixed salary, and is aged below 40years, 40% of income should be added towards future prospects; if aged between 40 to 50 years, 25% of income should be added towards future prospects; if aged more than 50 top 60years, 10% of the income should be added towards future prospects.

(iv) Multiply the above income i.e, (annual income)-(personal expenses)+(future prospects) with the appropriate multiplier, “18” if the deceased is aged between 15 -25years; “17” if the deceased is aged between 26-30yeasrs; “16” if the deceased is aged between 31-35years; “15” if the deceased is aged between 36-40years; “14” if the deceased is aged between 41-45years; “13” if the deceased is aged between 46-50years; “11” if the deceased is aged between 51-55 years; “9” if the deceased is aged between 56-60years; “7” if the deceased is between 61-65years; and “5” if the deceased is aged between 65-70years.

Assume, if the deceased is a permanent job holder having an annual income of Rs.,3,00,000/- and is aged 35 years, having wife, two children, mother and father, the compensation towards loss of future income would be Rs.57,60,000/-

Annual Income: :: Rs.3,00,000/-

(-) Personal Expenses: (1/5th) :: Rs. 60,000/-
_________________
Rs.2,40,000/-
(+) Future Prospects: (50%): :: Rs.1,20,000/-
_________________
Net Annual Income: :: Rs.3,60,000/-
_________________

In view of the age of the deceased being 35years, the appropriate multiplier would be-16.

Hence, his loss of future income would be Rs.57,60,000/- i.e., Rs.3,60,000/- (x) 16 as multiplier.

The total compensation you would be liable to pay is Rs.59,85,000/-as follows:

Loss of future income: :: Rs.57,60,000/-
Loss of consortium to wife: :: Rs. 40,000/-
Loss of love & affection to children: :: Rs. 80,000/-
Loss of Love and Affection to parents: :: Rs. 80,000/-
Funeral & Transport Expenditure: :: Rs. 25,000/-
________________________
Total amount of compensation: :: Rs.59,85,000/-
________________________

(C) TO PROTECT YOUR FAMILY IN THE EVENT OF YOUR DEMISE:

The most unfortunate outcome of a road accident is the vehicle owner's demise. Once the bread-earning policyholder has passed away, it might become difficult for his or her family to sustain its daily life. However, if you take motor vehicle insurance policy, the insurance company may pay the compensation to the family members of the deceased owners depending upon the payment of the separate premium for own life coverage.

CONCLUSION:

If you do not take motor vehicle insurance policy and if your vehicle is responsible for the accident resulting in the injury or death of any person, you are personally liable to pay the compensation. On the other hand, if you take the motor vehicle insurance policy, you are not liable for making payment of compensation to third parties and the insurance company will pay the compensation to the dependants of the third party deceased on your behalf.

In view of the above facts, irrespective of the nature of the vehicle, whether small or big you own, I advise you to take the motor vehicle insurance policy to save & absolve yourself from making huge payment of the huge amount of compensation to the third party injured/legal heirs of the third party victims.


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