Wednesday, August 7, 2013

Road Accidents: Third Party Insurance - the confusing scenario

In many countries of the world Third Party Compulsory Insurance is mandatory, each vehicle has to be insured and motorists cannot drive a vehicle which is not insured on a public road.

By Neeraj Mahajan

Road traffic accidents are a leading cause of death and injury worldwide. Nearly 1.2 million people are killed in road accidents, atleast 50 million are injured, occupying 30-70 percent orthopedic beds in hospitals. And if this trend continues, road accidents may be the third-leading cause of death and injury by 2020.

The impact of this accounts for 85 percent annual deaths and a loss of 90 percent of disability-adjusted life years (DALYs) because of road traffic injury in the developing countries. The worst affected are the males (73 percent deaths). More than one-half of all road traffic deaths globally occur in 15-44 age groups or the most productive earning years. This price is paid by the families who suffer economic hardship due to the loss of the breadwinner.

As a consequence of this, the standard of living of many poor families who lose a family member in road accident decreases, a good number of them have to borrow money to meet routine expenses. 

In general, speed, driver impairment, driving under the influence of alcohol or drugs, Sleep, fatigue, Low visibility are some of the major causes of crashes, deaths, and serious injuries. Pedestrians, cyclists, moped and motorcycle riders are the most vulnerable as well as the heaviest road users in poor countries.  

This is notwithstanding the fact that road traffic injuries are predictable and preventable. In many countries of the world Third Party Compulsory Insurance is mandatory, each vehicle has to be insured and motorists cannot drive a vehicle which is not insured on a public road.

The purpose of Comprehensive Insurance is to cover damage to someone else's property or vehicle as well as own vehicle. In India Auto Insurance deals with insurance cover for the loss or damage to the automobile or its parts due to natural and man-made calamities. It provides accident cover for the owners of the vehicle while driving, passengers and third party legal liability. In the US drivers opt for insurance as a means of protection against costly breakdowns – even otherwise.

But this seems to be a problem area as different countries have different rules. For instance South Africa assigns a percentage of the money collected from purchase of gasoline into the Road Accident Fund, which goes towards compensating third parties in accidents whereas in some countries like Afghanistan, Nepal or North Korea third party insurance is not compulsory. 

EUROPEAN UNION: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, United Kingdom.
EUROPE EXTRA EU: Albania, Andorra, Armenia, Belarus, Bosnia Herzegovina, Croatia, Georgia, Iceland, Liechtenstein, Macedonia, Moldova, Monaco, Montenegro, Norway, Russia, San Marino, Serbia, Switzerland, Turkey, Ukraine, Vatican City.
ASIA: Azerbaijan, Bahrain, Bangladesh, Bhutan, Brunei, China, Hong Kong, India, Indonesia, Iran, Iraq, Israel, Japan, Jordan, Kazakhstan, Kyrgyzstan, Kuwait, Lebanon, Macao, Malaysia, Maldives, Mongolia, Myanmar (Burma), Oman, Pakistan, Palestine, Philippines, Qatar, Saudi Arabia, Singapore, South Korea, Sri Lanka, Syria, Taiwan, Thailand, Turkmenistan, United Arab Emirates, Uzbekistan, Vietnam.
AFRICA: Algeria, Angola, Benin, Botswana, Burkina-Faso, Burundi, Cameroon, Central African Republic, Chad, Comoros, Congo (Brazzaville), Democratic Republic of Congo (Kinshasa), Djibouti, Egypt, Gabon, Gambia, Ghana, Ivory Coast, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Namibia, Niger, Nigeria, Rwanda, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Tanzania, Togo, Tunisia, Uganda,
Zambia, Zimbabwe.
AMERICA: Antigua and Barbuda, Argentina, Bahamas, Barbados, Belize, Brazil, Canada, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, EI Salvador, Grenada, Guyana, Haiti, Jamaica, Panama, Peru, Puerto Rico, St. Kitts & Nevis, St. Lucia, Suriname, Trinidad and Tobago, Uruguay, USA (in 48 federate States out of 51), Venezuela.
OCEANIA: Australia, Fiji, Kiribati, Nauru, New Zealand, Papua New Guinea, Solomon Island, Vanautu
ASIA: Cambodia (commercial motor vehicles), Laos (for foreigners and for commercial vehicles).
AFRICA: Mozambique (for public transport and foreign motorists).
AMERICA: Bolivia (for diplomatic cars), Cuba (diplomats and foreign residents, public transport, vehicles transporting goods), Guatemala (for public transport and school-buses), Honduras (for international transport vehicles), Mexico (in Puebla, Monterrey, Sinaloa and in Distrito Federal for public transport), Paraguay (for public transport).
ASIA: Afghanistan, Nepal, North Korea, Tajikistan, Yemen
AFRICA: Cape Verde Islands, Equatorial Guinea, Eritrea, Ethiopia, Guinea, Guinea Bissau, Somalia
AMERICA: Dominica, Nicaragua, St. Vincent and the Grenadines, U.S.A. (New Hampshire, Tennessee, Wisconsin).
OCEANIA: East Timor, Tonga, Tuvalu, Western Samoa Islands

Also Read:

Motor Vehicle Insurance: Taking people for a ride… Part 1

Motor Vehicle Insurance: Taking people for a ride…2

Motor Vehicle Insurance: Taking people for a ride…3