Have Many Traffic Fines? You May Have To Pay More For Vehicle Insurance

Delhi Lieutenant Governor VK Saxena has written to the Union Finance Minister Nirmala Sitharaman, asking her to link insurance premiums of vehicles to the number of traffic violations recorded against the vehicles.

He asked Ms Sitharaman to consider his proposal for a tiered insurance premium system that directly reflects the driving behaviour of drivers. Vehicles with a history of violations, including speeding, reckless driving, or other traffic offences would be required to pay higher premiums. This financial deterrent would incentivise safer driving practices and foster a culture of responsible motoring on Indian roads, the Lieutenant Governor said.

Mr Saxena underlined in his letter that implementing such a system would not only align insurance costs with the actual risk posed by drivers, but will also reduce financial burden on insurers resulting from frequent claims.

This financial deterrent driven approach, practised in the US and European countries, would promote responsible driving behaviour, leading to reduction in accidents, saving lives, and ensuring more efficient management of insurance claims, the Lieutenant Governor said.

The letter mentioned recent data from the Road Transport and Highways Ministry that found a disturbing trend of speeding and red-light jumping, which contributed significantly to fatal accidents. A comprehensive study by the World Bank further underscored the correlation between multiple traffic violations and a heightened risk of severe crashes and emphasised the need for urgent action.

India recorded over 4.37 lakh road accidents in 2022, resulting in approximately 1.55 lakh fatalities. Notably, speeding accounted for nearly 70 per cent of these accidents, while violations such as red-light jumping contributed significantly to fatal accidents.

An analysis of accident data by the World Bank indicated that vehicles with multiple traffic violations have a 40 per cent higher risk of being involved in fatal crashes compared to those with a clean driving record.

In support of his proposal, the Lieutenant Governor also highlighted Delhi's accident statistics that corroborated these findings. According to a 2023 report of the Delhi Traffic Police, 60 per cent of fatal road accidents involved vehicles that had previously been fined for traffic violations, primarily speeding and red-light jumping. Vehicles with more than three traffic challans in a given year were found to have a disproportionately high involvement in severe accidents.

The Lieutenant Governor asked the Union Finance Minister to engage the Insurance Regulatory and Development Authority of India (IRDAI) to take immediate action for a framework for index-linked insurance premiums.

By implementing this policy, India can take a significant step towards creating safer roads, saving lives, and ensuring a more sustainable transportation system for generations to come, the letter said.