A motor vehicle can avail two types of insurance: third-party insurance and comprehensive insurance. A comprehensive motor insurance policy typically has two insurances to cover -the third-party insurance and for own damages. Some policies also come with built-in personal accident coverage for owner or authorised driver. As the names suggest, the 'own damages' and 'personal accident' insurance components are to cover losses like damage to vehicle or personal injuries, disability and death, respectively.
A Motor Third-party Liability Insurance (MTPL) is a form of liability insurance obtained by an insured vehicle (first party) from an insurance company (second party) for protection against the claims of victims of accident (third-party). The first party is responsible for their damages or losses, regardless of the cause of those damages. The third-party motor insurance covers the insured vehicles in case any liability claim arises out of bodily injury, property damage, or death of a person (third-party).For this reason, third-party insurance policies are often called 'Act only' insurance.
The insurance company is the second party while the first party is insured, and any other who suffers death, injury or the person who claims damages against insurer is the third-party. "Third-party" can mean a person travelling in another vehicle, one walking on the road or a passenger in the vehicle which is the subject matter of insurance policy.
Third-party insurance is compulsory for all vehicles used in public places in most countries. Unfortunately, the Motor Vehicle Act 2018 of Bangladesh does not make such third-party insurance mandatory. There is optional third-party insurance (clause 60). It has given an opportunity to vehicle owners: They do not incur additional cost of third-party motor vehicle insurance and complete the formality with a 'minimum risk' insurance coverage. The minimum risk insurances are issued by insurance companies for a few hundred Takas only. This goes to only cover the formality of obtaining insurance documents.
A standard MTPI covers only legal liability of the driver for any damage caused to a third-party - bodily injury, death and damage to third-party property etc. - while using a vehicle of the owner or the authorised person.
Under this insurance policy, the insurance company agrees to indemnify the insured person (owner/driver), in case he is sued or held legally liable for injuries or damages done by him to a third-party. The victim can claim for compensation under Motor vehicle law of the country. An unlimited compensation is available only for bodily injury or loss of life but the compensation for properties usually has a limit. It also covers damage caused to any surrounding property. The compulsory nature of third-party insurance is justifiable as it makes the process easy for the injured person to recover money from the insured/insurer.
In most countries, motor third-party liability (MTPL) insurance is compulsory to protect the common people. MTPL ensures that damage to third-party health and property caused by an accident for which driver and/or owner of the car were responsible is covered. A policy may be taken out by the owner of a vehicle or by a lawful possessor authorised by the owner on behalf of the owner.
In case of an accident where the vehicle or driver cannot be identified, the claim of insurance cannot be established under the circumstances. This is why, most governments have created insurance guarantee fund under their respective laws. This fund is also eligible for road accident victims who suffer injuries caused by hit-and-run drivers and to pay claims for property damage caused by uninsured motorists. While identity of the driver and/or vehicle owner is not necessary, payment of indemnification does, of course, require proof of the injury and the corresponding causal link.
The victim or his heir must furnish simple proof of the accident and the resulting injury. The person must disclose the presence of the elements as: (a) the accident in which he or she was involved that was caused by a vehicle or its cargo, (b) the injury suffered, and (c) the causal relationship between the two. This proof must be furnished in the form of official documents, such as a death certificate, medical reports of the treatment or hospitalisation of the accident victim, the report by the medical examiner, and documents attesting to payment of medical or supplementary expenses.
The fund may be created with financial support of the government or the insurance companies of the country. The penalty imposed by policy on violator of law may be deposited to the fund. Government can also impose additional tax for contribution to the fund. The terms and conditions, scope of coverage, or type of policies included in the scheme will be defined by the regulations of the country concerned.
The Motor Vehicle Act 2018 of Bangladesh has a provision under section 53 for a financial aid or compensation Trust. The trust fund shall be created for supporting the treatment of victims and compensation in case of death of the victim. The trust will organise the fund and determine the compensation for the victims. The fund shall be generated with annual contribution from owners of motor vehicle (sec 53-2). Section 57 of the Act also states that this fund will be established from five main sources: grants from the government, contributions from motor vehicle owners, fines obtained under the Act and grants from motor vehicle owners' and workers' associations.
There is a lack of initiative to create a trust under the law. The penalty of small traffic rule violators are penalised by police on the street. It is often alleged that the respective police officer gets a handsome portion of the fine. Such amounts are sufficient to create a trust fund for road accident victims.
Bangladeshi victims and the civil society usually refer to several laws of the country to deal with motor accident. These laws are - the Bangladesh Penal Code 1860, the Motor Vehicles act, the Employers' Liability (Compulsory Insurance) Act 1969, the Road Traffic Act 1988, the Consumer Rights Protection Act 2009 and the Fatal Accidents Act 1855. In addition to this, they encourage victims to claim compensations under other various statutes and regulations. The Fatal Accident Act 1855 provides for compensation to families for loss following the death of a person caused by actionable wrong. The 1855 act gives a right to the beneficiaries as, under the act, the dependants i.e. wife, husband, parent and child, if any, of the deceased has a statutory right to file a suit for damages against someone whose wrongful act, neglect or default has caused the death.
Civil society promotes the idea of compensation that should be obtained by family members of victims from drivers and owner of the vehicles. Case can be filed in the name of the executor, administrator or representative of the deceased person and under every such action, the court may give such damages as it may think proportioned to the loss resulting from the death to the parties respectively, for whom and for whose benefit such action shall be brought.
But, the actual situation is very different. Some of the financially-solvent and socially-influential families of road accident victims usually get decisions of compensation from higher courts of the country. But the implementation of these verdicts is very slow and often uncertain due to many reasons. The recent verdicts from courts for compensation to be paid to affected family members and victims from drivers may not be feasible as the drivers hail from poor families. On the other hand, as the transport sector is mostly operated by private sector, such a situation can discourage private sector investment in the transport businesses. The economy can suffer in the long run.
The majority victims of motor accident are pedestrians and from low income groups. They are financially not in a position to go to court to claim compensation. The Motor Vehicle Act 2018 should be amended to make third-party insurance mandatory and a special court should be formed to give decisions quickly. Following most accidents, drivers and owners go into hiding to avoid public assaults and legal harassment. The proposed trust fund should have mandatory clause of compensation to the victims despite non-identification of the driver and the vehicle involved in accident.
M S Siddiqui is a legal economist.
