Economy, Business And Markets

Third Party Car Insurance Mandatory

Third Party Car Insurance Mandatory  Third Party Car Insurance Mandatory

Parliament has approved a measure to impose pecuniary penalties on car owners without third party vehicle insurance. The measure is part of an amended law that makes it more difficult for vehicle owners to avoid third party insurance.

According to the law, if a vehicle without insurance is owned by a legal person, they will be fined an equivalent of 20% of the physical damage suffered by the parties in the case of an accident. The fine would be 10% if the car owner is a natural person.

All the proceeds from the fines will go to a special fund designated to cover losses in road mishaps in which vehicles lacked third party insurance.

As reported by ISNA, one article of the law stipulates that in the case of a car crash, the insurer is required to compensate the inflicted parties for physical or financial damage according to the reimbursement ceiling.

 However, if the car owner does not hold a third party insurance policy only the physical damage will be reimbursed from the special fund.

The law states that the Iran Insurance Company is the only entity eligible to sell third party insurance to car owners which lack coverage while other insurance companies wanting to sell policies will have to submit their request to Central Insurance of Iran, the top state insurance company.

According to CII’s latest report, during the first six months of the calendar year (started March 21) third party vehicle insurance accounted for 33.4% of the total policies sold by insurance companies, putting it at the top spot.

 It also comprised 38.8% of the total claims paid by insurance companies, making it the top indemnifier as well.

The new law is expected to help further promote third party vehicle insurance among drivers and spur growth in the industry as urged by the CII and the nascent insurance industry.