Accident Insurance Claim Through MACT (Motor Accident Claim Tribunal)
News is filled with reports of various kinds of road accidents - vehicle knocking another vehicle, damaging property or killing or injuring people. We ourselves have a story or two to tell, bad experiences that might have cost us a bomb. Yet, not many seem to have clarity on how to make a claim when they or their vehicle are hit by another vehicle. In case of damage to our car we either usually settle it ourselves or depend on our car insurer to pay for the damages even if it means losing the accrued No-Claim Bonus (NCB) for no fault of ours. How about learning a bit more about third-party motor insurance, the mandatory cover which we have been paying premiums for so long?
What's covered under third party motor insurance
A comprehensive motor insurance policy typically has two insurance covers bundled together -the third party insurance and the own damages cover. Some also come with a built-in personal accident cover. As the names suggest, the 'own damages' and 'personal accident' insurance components are to cover your losses i.e. damage to your car or personal injuries, disability and death, respectively.
While the above two are optional covers, third-party insurance is compulsory for all vehicle-owners as per the Motor Vehicles Act. For this reason, standalone third party insurance policies are often called 'Act only' insurance. Your third party insurance does not cover you and your motor vehicle. It covers your legal liability for the damage you may cause to a third party only - bodily injury, death and damage to third party property - while using your vehicle.
Beneficiary of third party insurance is the injured third party. The insured or the policy holder is only nominally the beneficiary of the policy.
In a third party insurance policy the first party is the insured and the second party is the insurance company. The third party here is any third person.. Under your third party insurance, a third party can file a claim for compensation for injury, death, property damage caused by your car. The case for claiming compensation under third party will be filed against you and your insurer. While there is no limit on the liability covered for injury or death, the cover for third-party property (usually the third party's car) damage is capped at Rs 7.5 lakh. "In case damages exceed the upper limit, the balance has to be paid by the policyholder himself," says Sanjay Datta, Chief Underwriting & Claims, ICICI Lombard General Insurance.
If you are the third party hit by another's car then you can claim damages from the other person. In case of injury you can claim medical expenses, compensation for physical disfigurement and also for loss of earnings if you are unable to work after the accident. In case of death, the dependents of the deceased can claim compensation on the basis of the income lost. Medical expenses can also be claimed for treatment of the injury that was the cause of death. For property damage, surveyor's report, original bills from an authorised garage and motor vehicle inspection report are required to quantify the loss. If you are successful in your compensation claim then you would be paid (up to the limits in the policy) by the other person's insurer under his/her third party insurance.
The premium rates for third party insurance are fixed by the IRDAI and are the same for all insurance companies. However the amount you pay as third-party premium may differ according to the engine capacity of your car. For instance, while a smaller Hyundai i10 owner has to pay around Rs 1,500, for a Toyota Altis, the annual third party insurance premium is around Rs 5,000. This fixed third party insurance rate is reviewed by the authority annually and adjustments, usually an increase, are made if needed.
Complex Claims Process
Making a third party motor claim is not easy. The complex course begins with filing an FIR with the police and obtaining a charge sheet, which, as we all know is a mammoth task in itself. After this, one has to approach a motor claims lawyer who files a case in a special court, the Motor Accident Claims Tribunal. Civil courts cannot decide road accident compensation claims. The case has to be either filed in the tribunal with jurisdiction over the area where the accident occurred or with the tribunal with jurisdiction over the area where the claimant or the defendant resides. The court then hears both sides, examines the evidence, and fixes the liability. If the decision is in your favour, you get compensated for your loss.
However, this three-step process is not all that simple as rules differ according to scenario and the insurance coverage that both parties have. This makes the ground reality far more complicated than what it appears on paper.
Here are the different permutations and combinations of situations where A's car has been damaged by B's car in an accident and the legal solution(s) in each case.
When A has only a basic third-party insurance
Those who do not have a comprehensive motor cover are on their own as they can only claim compensation under the third party insurance of the other person i.e. in this case B. Your own insurer will neither compensate you nor help you file a complaint as the insurance agreement you have with your own insurer is solely for your liability towards any third-party for damages. However in this case, your own car has been damaged which is not covered under your third party contract. Here you are the third party and can only claim compensation under B's third party insurance. So, unless you have an own damages cover, the only way to get compensated is to track down the other vehicle and lodge a complaint against the other party. The onerous task here is establishing the other party's fault in court.
The victim has to establish negligence and only then there is a case against the wrongdoer (B) and his/her insurance company. So, you cannot be sure of getting any money until the court decides in your favour. Moreover, it is not necessary that a favourable decision will mean that you get the full amount you had filed for. The other party and his insurer will only pay you the amount awarded by the court. What is more, if you happen to get less than what you claimed you cannot claim the balance damage compensation from your own insurer under your 'own damage' policy because as per law compensation for the same damage cannot be claimed more than once. The above process would be the same irrespective of whether B has comprehensive motor insurance or third party insurance only.
You can request your insurer to subrogate a case only if you have comprehensive motor insurance and not a 'third party only* policy. You will have to apply to your insurer requesting subrogation and it is up to your insurer to accept or reject this request. This decision is taken by the insurer after requisite investigation. Subrogation is the right of an insurer to pursue a third party who has caused an insurance loss to the insured. "The insured has to sign a document giving the subrogation right to his insurer after he gets reimbursed for the losses. The insurance company then approaches the third-party's insurer to recover the amount of the claim paid to the victim for the loss," says Sanjay Datta of ICICI Lombard. However, cases of subrogation are very few. It mostly happens in case of death or injury of the insured (in this case A).
When both parties have comprehensive covers
Unless it is a case of death or disability even if both parties have comprehensive insurance, your insurer will not help you file a claim against another insurer i.e. your insurer will not agree to subrogate your case. Motor insurers have a 'knock-for-knock agreement' in which they agree to bear responsibility for damages to vehicles insured with them as long as it is covered for 'own damage', regardless of who (i.e. which insurer) is liable to pay.. "The vehicle repair and medical expenses are to be settled by the insurer who has covered it and no claim will be recoverable from the insurer of the vehicle responsible," says Datta.
Third party compensation for only vehicle damage
Even though it is legally possible, insurers hardly receive cases claiming third-party compensation for only vehicle damage. People are advised to settle it out-of-court as the process is not only cumbersome but highly time consuming. Third party claims are filed for injury and death but settlement of these also takes a long time. "On an average, in third-party claims involving bodily injury the turnaround time is one to two years. In case of death, it takes about three to four years to settle claims," says Datta of ICICI Lombard.
Obviously, unless one does not have a comprehensive cover, no customer is willing to take so much trouble for a small crash that can be swiftly settled with an own-damages claim, even if it means losing out on the NCB. If you are still keen on moving the tribunal, make sure you have all the documents in place. Also, ensure that proper narration of the incident is recorded in the FIR and original records of expenses are kept to substantiate the pecuniary losses. This is crucial to get a verdict in your favour.