Insurance for e-rickshaws to be offered as per RTO norms

E-rickshaws are likely to come und er the auto-rickshaw category, where there was a 10% hike in TP premiums for this fiscal

With the Lok Sabha passing the Motor Vehicles Amend-ment Bill, 2014 on Thursday, paving the way for regularisation of e-rickshaws that had been banned by the Delhi High Court on safety grounds, third-party insurance policies will also be offered to these vehicles.

A senior general insurance executive explained that earlier, when the vehicles were banned, insurance policies were not offered to the drivers/owners of the vehicles.

“Now that the amendment Bill has been passed, e-rickshaws will begin plying on the road. They would have to first register with the Regional Transport Office or RTO (Motor Vehicles Department), after which covers will be offered,” said the official.

According to the Motor Vehicles Act 1988, no vehicle is allowed to ply on Indian roads without taking a third-party insurance cover. This cover protects the vehicle’s owner from liability arising from accidents involving the vehicle.

While introducing the Bill, road transport and highways minister Nitin Gadkari had said that e-rickshaws might not be suitable for congested cities such as Mumbai, though it could be allowed in suburbs. According to insurance company executives, if these vehicles are allowed in Mumbai, it would be a risky proposition to offer insurance because the traffic situation will worsen.

“If they are introduced in places like Bengaluru or Mumbai, we will be mandated to provide a cover. In that case, premiums for a comprehensive cover may be higher,” said the general manager of a public general insurance company.

Third-party insurance cover pricing is regulated by the Insurance Regulatory and Development Authority (Irda), while the ‘own damage’ cover is not. A comprehensive cover includes both own damage and third-party coverage.

E-rickshaws are likely to come under the auto-rickshaw category (not carrying more than six passengers), where there was a 10 per cent hike in third-party premiums for the current financial year.