Does Third-Party Car Insurance Require FASTag?

Does Third-Party Car Insurance Require FASTag?

Does Third-Party Car Insurance Require FASTag?

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In today’s fast-paced world, owning a car has become necessary for many people. However, with car ownership comes the responsibility of ensuring it is protected against any damage or losses on the road. One of the ways to do this is by purchasing car insurance. In India, car insurance is mandated by the Motor Vehicles Act, and it comes in two forms: third-party cover and comprehensive cover. While third-party insurance is the minimum requirement, many people opt for comprehensive car insurance to provide added vehicle protection.

With the government pushing for a digital and cashless ecosystem, the question arises: does third-party car insurance require a FASTag? In this blog, we will explore the relationship between the third-party car insurance online and FASTag, and what it means for car owners in India. And if you are aiming to buy trusted four-wheeler insurance, you can go for Tata AIG. They provide online car insurance, making the purchase process simple and easy.

Explanation of Third-Party Car Insurance

Third-party cover in car insurance protects against damage to another person or their vehicle in the event of an accident. For example, suppose the policyholder is involved in an incident causing a third-party injury, death, or property damage. In that case, the first party’s insurance company will pay out the damages on their behalf. As this type of insurance only covers third-party claims, it is more affordable than comprehensive insurance.

Under the Motor Vehicle Act of 1988, all vehicle owners must have at least third-party insurance. In case of failure to obtain this coverage can result in fines or legal repercussions. Thus, getting third-party insurance as soon as you purchase a vehicle is always recommended to avoid legal complications.

Importance Of Understanding Third-Party Insurance Requirements

Understanding the requirements of third-party insurance is crucial for several reasons.

  1. Firstly, it is a legal requirement per the Motor Vehicle Act of 1988, and failing to follow this requirement can result in fines or legal consequences.
  2. Secondly, having online car insurance for a third party protects you from financial liabilities in case of an accident causing harm to a third-party person or vehicle. In such an event, the second party or the first party’s insurance provider pays the damages on behalf of the first party, thereby shielding them from incurring high costs.
  3. Thirdly, having a clear understanding of third-party insurance requirements enables you to make informed decisions when choosing the type of insurance policy, ensuring that you are fully covered in the event of an accident.

It is also important to note that third-party insurance is less expensive than comprehensive insurance due to its limited scope of coverage. However, a comprehensive insurance policy for maximum protection is always recommended. Nevertheless, having at least third-party insurance is crucial as it provides a minimum level of coverage and protects you from financial liabilities.

What is FASTag?

FASTag is a device with a microchip incorporating Radio Frequency Identification (RFID) technology that records data when scanned. This data, including information about the vehicle, is linked to a bank that issued the FASTag. The tag can be read using a FASTag reader, which sends the data to a toll booth. The server at the toll plaza then communicates directly with the bank to transfer the payment.

Government Mandates Concerning FASTag

Implementing FASTags was mandatory for four-wheeler registration in 2017, with automobile manufacturers or dealers responsible for providing new vehicle owners with the necessary tags. The government has also mandated renewing fitness certificates for transport vehicles with FASTags installed. Additionally, National Permit Vehicles have been required to have FASTags since October 1, 2019.

To increase the usage of FASTags, the government has proposed new changes in the Ministry’s circular. Starting April 1, 2021, it will be mandatory for all new automobile purchases to have a third-party insurance policy that includes a FASTag. This information of the FASTag would be recorded in the third-party insurance policy. Furthermore, all vehicles sold before December 31, 2017, must have FASTags from January 1, 2021.

Significance of Fastag Records In The Third-party Insurance Policy

Earlier, getting third-party insurance was time-consuming and required going through traditional channels. However, now you can get insurance much faster and more efficiently. The use of FASTag will streamline and shall help –

  1. For administration of automobile insurance plans and ensuring the accuracy of administrative tasks.
  2. The use of FASTag could lead to the automation of third-party insurance renewal.
  3. Payments for insurance renewal could be handled through FASTag in the future.

Conclusion

Third-party car insurance is mandatory in India per the Motor Vehicle Act of 1988. It protects against financial liabilities in case of an accident causing harm to a third-party person or vehicle. On the other hand, FASTag is a device linked to a bank that facilitates automatic toll payments and has been made mandatory for all new automobile purchases since April 1, 2021, as well as for vehicles sold before December 31, 2017. FASTag will aid in the administration of automobile insurance plans and the accuracy of administrative tasks. It may even lead to automating third-party insurance renewal with payments handled through FASTag. Hence, car owners must clearly understand third-party insurance requirements and the significance of FASTag records in their third-party insurance policies.

People Also Ask

Is FASTag mandatory for third-party insurance?

FASTag is not mandatory for third-party insurance but is required for toll payments on National Highways in India. FASTag is an electronic toll collection system that enables the automatic deduction of toll charges and eliminates the need for vehicles to stop at toll plazas.

What is FASTag insurance?

FASTag is not an insurance; it is an electronic toll collection system. FASTag is a prepaid tag fixed on the vehicle’s windshield and used for making toll payments automatically without stopping at the toll plaza. When a FASTag-enabled car passes through a toll plaza, the toll charges are automatically deducted from the prepaid account linked to the FASTag. The system is designed to make toll payments faster and more convenient, reducing waiting time and fuel consumption at the toll plazas.

It is important to note that FASTag is not related to vehicle insurance, which is an individual requirement. However, vehicles in India must have at least third-party insurance, which provides coverage for any third-party liabilities arising from vehicle use.

Is it compulsory to buy FASTag from a car dealer?

No, buying a FASTag from a car dealer is not compulsory. FASTags can be purchased from various sources, including toll plaza operators, banks, online portals, and mobile apps. In addition, some car dealers may offer FASTags as part of the vehicle purchase process, but it is not mandatory to buy a FASTag from a car dealer.

You can easily purchase a FASTag from a bank, an issuer-authorised Point of Sale (POS), or the National Highway Authority of India (NHAI). Buying a FASTag usually involves filling out an application form, submitting the required documents, and paying the required fee. After activating the FASTag, you can start using it for making toll payments.

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