The government has amended the compensation amount payable for third-party fatal accidents and injury claims. According to the amendment made in Motor Vehicle Act, 1988 through notification dated May 22, 2018, the amount of compensation payable in case of death will be Rs five lakh. The amount payable as compensation has been decided keeping in view costs of living said the notification.
The notification also states that if the accident results in permanent disability, compensation will be payable based on this formula:
Compensation amount = Rs 5 lakh X percentage disability as per schedule I of the Employee's Compensation Act, 1923.
The minimum compensation in case of permanent disability of any kind shall not be less than Rs 50,000. However, for accidents resulting in minor injuries, the compensation amount is fixed at Rs 25,000.
The changes have come into effect from May 22, 2018. Therefore, any third-party claims filed on and from May 22, 2018 will be paid as per the amount mentioned above.
The notification also stated that to keep up with the cost of living in the future, the compensation amount will increase by five percent annually for all types of compensations with effect from January 1, 2019.
This means that from January 1, 2019, the amount of compensation payable in the event of death will increase by 5 percent to Rs 5,25,000. Similarly, compensation in case of minor accidents will increase from Rs 25,000 to Rs 26,250. The earlier law stated that the minimum amount payable as compensation in case of death was Rs 50,000 and for permanent disability was Rs 25,000. However, these cases were later taken up by the courts who used to settle these claims. The law now is clear that Rs 5 lakh will be payable for death and Rs 50,000 will be payable for permanent disabilities.
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