Third party insurance may become mandatory

Source: PTI

May 02, 2007 16:52 IST

The Finance Ministry is considering to make it mandatory for all private general insurance companies to provide third party motor insurance, which is presently optional for them.

"The Left Parties have also supported the move to make it mandatory for the private insurance companies to sell third party motor insurance, which is presently done mostly by public sector insurance companies," said a finance ministry official.

He said these are some of the provisions that are being pushed by the Finance Ministry through amendments in the Insurance Act, 1938. The Left parties are, however, opposing the Bill, as it also entails a provision of raising the FDI limit from 26 per cent to 49

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per cent.

The official said the Group of Ministers on Insurance will soon meet Left party leaders to thrash out differences, and the bill could be moved in this regard.

Currently, it is mandatory for all vehicle owners including two wheelers, cars and commercial vehicles to take third party insurance - a cover against damage to any other vehicle or person in case of accident - under the Motor Vehicles Act.

There are complaints that private insurance companies do not provide third party insurance especially for older vehicles, giving lame excuses, though they have to meet certain social and rural commitments.