Tamil Nadu: Minimum Rs 5 lakh compensation for road accidents from this month

The provision that requires third party insurance companies to pay `5 lakh as a minimum compensation to families of people killed in road accidents is learnt to come into force from this month.

Published: 14th June 2018 04:11 AM  |   Last Updated: 14th June 2018 04:11 AM   |  A+A-

Image used for representational purpose

Express News Service

CHENNAI: The provision that requires third party insurance companies to pay Rs 5 lakh as a minimum compensation to families of people killed in road accidents is learnt to come into force from this month. The Union ministry of road transport and highways had on May 22 amended the second schedule of Motor Vehicles Act 1988 to this effect.

The move is aimed at discouraging people from filing litigation in the tribunals seeking compensation for road accidents. However, the victim families can move a tribunal seeking higher compensation and there is no cap fixed on the upper limit of the compensation that the tribunal can award. In case of permanent disabilities, the insurance companies must pay the victim Rs 5 lakh multiplied by the percentage of disability (for instance, a 10 per cent disability means a minimum compensation of Rs 50,000). In case of minor injuries, the minimum compensation is fixed at Rs  25,000.

“Earlier, the sum was Rs 50,000 for a fatality. Now it has been increased to Rs 5 lakh. There is no upper limit for the maximum compensation,” official sources in the State transport department said. The notification also says that this minimum compensation amount would be hiked by five per cent every year starting from January 1, 2019.

“People below 18 years or above 55 would normally get an award from the claims tribunal for only about Rs 3 to Rs 4 lakh. So, if the insurance companies pay them Rs 5 lakh without any delay, they will be benefitted,” said Madras High Court advocate Siddharth Ramachandran.

However, a section of advocates felt that the compensation was too low and the move would hardly make any impact. V S Suresh, an advocate, said Rs 5 lakh was too little and even victims above the age of 60 were awarded compensation of Rs 15 lakh and above in many cases.

“Even for an unemployed or an elderly person, compensation is calculated based on the Minimum Wages Act, which normally comes to around Rs 8 lakh to Rs 10 lakh. The medical expenses alone exceed Rs 5 lakh for many victims. Had the minimum compensation been fixed at Rs 10 lakh, it might have reduced court cases,” he said.

Higher payments for disability too  

  • In case of permanent disabilities, the insurance companies must pay the victim Rs 5 lakh multiplied by the percentage of disability.

  • A 10 per cent disability means a minimum compensation of Rs 50,000 and in case of minor injuries, the minimum compensation is fixed at Rs 25,000

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