You May Have To Shell Out More For Your Vehicle Insurance For Traffic Violations

VK Saxena, Delhi Lieutenant Governor has requested Nirmala Sitharaman, Union Finance Minister, to link vehicle insurance premiums to the traffic violation number associated with every vehicle, according to a recent media report. In a written letter, he has asked Sitharaman to implement a tiered insurance premium system that reflect’s driver’s behavior. Vehicles with a history of offenses such as reckless driving, speeding, or other traffic violations would face higher insurance premiums. Saxena believes that this step would be like a restraint, encouraging safer driving habits and fostering a culture of responsible road behavior in India. 

Saxena pointed out in his letter that implementing such as system would bring down the financial burden on insurers leading to frequent claims. It would also bring on the same page insurance costs with the actual risk posed by drivers. 

Moreover, the lieutenant Governor reiterated that this approach, which is already practiced in developed countries like the US and several European countries, would promote responsible driving behavior. While it would save lives, and help reduce accidents, it would also improve the efficiency of managing insurance claims. His letter had references from recent data from the Ministry of Road Transport and Highways, indicating a sad trend of speeding and red-light violations that have fairly contributed to fatal accidents. Moreover, according to a World Bank study, there is a strong link between repeated traffic violations and an increased risk of serious crashes, emphasizing the need for immediate action.

In the year 2022 alone, India witnessed over 4.37 lakh road accidents, leading to 1.55 lakh deaths. While speeding was responsible for nearly 70 per cent of these accidents, violations such as red-light jumping significantly contributed to fatalities. According to a World Bank analysis of accident data, compared to those with a clean driving record, vehicles with multiple traffic violations have a 40 per cent higher risk of being involved in fatal crashes. 

The Lieutenant Governor gave as an example Delhi’s accident statistics, which aligned with his findings, in support of his proposal. Around 60 per cent of fatal accidents involved vehicles previously fined for violations, mainly speeding and red-light jumping, according to a 2023 Delhi Traffic Police report. Also, vehicles with over three traffic challans in a single year were disproportionately involved in major accidents. 

The Lieutenant Governor requested Sitharaman to involve the Irdai in swiftly setting up a framework for index-linked insurance premiums. The letter stressed implementing this policy, as an important step in ensuring a more sustainable transportation system for future generations.