Why motor insurance is mandatory?

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Around 40,100 vehicles on Bhutanese roads are without mandatory motor insurance despite reports of motor accidents claiming 588 lives and injuring 2,946 in the last five years, putting many families under undue financial strain.

Road safety has become a global concern amidst reports of vehicle accidents claiming 1.3 million lives and injuring 50 million people. Such increasing fatalities call for improved road safety, regulations, financial protection, and well-being of road users, travellers, and pedestrians.

But for Bhutan, the growing laxity from the law enforcers to enforce mandatory motor insurance has left more than 46 % of the total vehicle population in the country without insurance. Such lapse from the law enforcer risks lives — not just of motorists without insurance themselves — but also of the passengers, pedestrians, fellow road users, and properties.

According to the Bhutan Construction and Transport Authority (BCTA), Bhutan has 125,535 vehicles registered as of December 2022. While 31,384 are old and unusable, 86,105 vehicles qualify as insurable.

However, only 46,005 vehicles remain insured with Bhutan Insurance Limited and RICB.

A staggering 46 % of the total vehicles in the country are still running without motor insurance.

Under Section 429 of the RSTA Act 2021, commercial vehicles should have comprehensive motor insurance. And other motor vehicles should at least have third-party motor insurance. Driving a motor vehicle without insurance is an offence with no insurance certificate, punishable by fines as per section 50 (2) of the RSTA Act 1999.

As per section 5 of the Commercial Passenger Vehicle Regulations, the penalty for a commercial vehicle with no insurance certificate is 25 units.

The penalty for light vehicles is five (5) units and two (2) units for two-wheelers. One unit of fine translates to Nu 50.

But with 40,100 vehicles going uninsured for years, the government coffer is also losing dearly.

For instance, if one unit of penalty is Nu 50, the government is losing up to Nu 10 Million annually on the fines for no insurance certificate, even if the fine for 40,100 vehicles is calculated at the rate of light vehicles. The state’s coffer could have lost over Nu 50 million for the 40,100 uninsured motor vehicles in just the last five years.

The loss from the fines would be even more staggering if calculated on the real-time data of commercial, heavy, light, and two-wheelers since the penalty is heftier for commercial and heavy vehicles. The large number of motor vehicles running without insurance in the country is also because of people’s lack of interest to insure their motor vehicles. Many seem to question the very basis of motor insurance, which leads to questions like:

Why is motor insurance mandatory? Is motor insurance only compulsory in Bhutan?

Motor insurance is mandatory because it helps protect vehicle owners from financial losses and third-party liability.

For instance, if a car hits another car, the insurance can help pay for the repair costs, saving the owners from financial losses. Moreover, having motor insurance can also help repair one’s car and another person’s property and pay medical and legal costs for injuring another person and damaging another’s property.

Hence, motor insurance is not only mandatory in Bhutan but across the globe, including countries as big as China and India. Even in countries as developed as America, Japan, and European countries motor insurance is mandatory.

As per the internet sources, drivers must carry active motor insurance across all 49 states in the US. Although New Hampshire is the only state where motor insurance is not mandatory, vehicle owners should take financial responsibility. Even in Japan, all vehicles must have compulsory automobile liability insurance to protect them from third-party liability, which is equal to mandatory motor insurance.

Therefore, while it does prove taxing, the fact that none of us can guarantee that we will be able to drive safely all the time and that no disaster could strike us down should be the reason enough to insure our vehicle. When you insure your vehicle — you don’t insure just the lifeless machine or you and your family’s — you insure more than your favourite car – you insure every road user’s life and everyone around that person.

That is why you need motor insurance. Because being insured is as safe as driving responsibly and safely.