Death is supposed to be the greatest leveller, yet accident compensation varies capriciously depending on how one dies

Third parties becoming fatal victims of road accidents got lucky posthumously after 21 May 2018 thanks to a significant and long overdue amendment to the Motor Vehicles Act, 1988 -- the deceased’s family would get a compensation of Rs 5 lakh as opposed to the miserable Rs 50,000 hitherto.

The loosening of purse strings takes into account the rising cost of living. The abysmal compensation of Rs 50,000 was a mockery. And as a corollary, the amendment has provided for something enduring -- every January, the compensation amount would go up by five percent. Thus, come 1 January 2019, the compensation would be Rs 5, 25,000. This is a sort of cost-inflation index to compensate for inflation in addition to the compensation for death of a near-and-dear one.

 Death is supposed to be the greatest leveller, yet accident compensation varies capriciously depending on how one dies

Representational image. PTI.

While this is definitely a sensible and compassionate step, one wonders as to why compensation varies depending on how one dies in an accident. The Workman Compensation Act provides for 60 percent of the wages multiplied by the relevant factor that effectively takes into account the age and the residuary service on the death of a workman while in harness, subject to a minimum of Rs 1, 40,000. A more generous payout to the bereaved family is warranted especially in the current milieu where workmen insurance cover is invariably taken by large employers.

The Indian Railways (IR) pays a compensation of Rs 4 lakh to a passenger’s family in case of his/her death and airline companies pay domestic passengers up to Rs 1.05 crore as per international norms, with the exchange rate factor being taken care of by the special drawing rights (SDRs) that take into account a basket of leading floating currencies. One tends to be philosophical about death which is why the common refrain that death is the greatest equaliser. Yet, laws discriminate among deaths with status becoming the major factor in determining compensation. Death by an air accident begets the greatest amount of compensation by far; the railways lags behind considerably.

Incidentally, a few top-notch banks in India offer their premium customers air accident cover. Understandably, they don’t offer any cover for rail travel and natural deaths. Mid-air collisions have been fewer and far between and the safety records of air travel is much better than that of the Indian railways.

Those dying as a result of the fury unleashed by nature, like a flood, an earthquake or those dying in man-made disasters such as a bridge caving in or radioactive leakage from nuclear plants are at the tender mercy of the powers that be.

Surprisingly, governments pay for the rehabilitation of those who are displaced by big dams but are coy about paying generous compensation when nature unleashes its fury.

Finance pundits advocate a generous life insurance cover for those who aren’t likely to leave behind a huge fortune for their dependants. It should be a term plan or pure life insurance cover sans an investment component like the Rs 2,500 premium for a Rs 1 lakh payout on the death of the insured within ten years.

The advantage of a contractual insurance with an insurance company over legal compensation is the certainty and adequacy of the money becoming available to the dependants. Bipartite contractual insurance does not discriminate between air travel and rail travel. Indeed the insurer pays without demur.

The government must be complimented for waking up to the reality of road accidents that killed as many as 1.51 lakh people in 2016, with fatalities coming down by three percent in 2017.

Indian roads take unacceptably high numbers of lives every year. The government has done its bit on the compensation front. Equally important is the prevention of fatalities on roads. While heightened fines for irresponsible driving has been mandated, it must be implemented without fear or favour.

(The author is a senior columnist and tweets @smurlidharan)

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Updated Date: Jun 08, 2018 21:35:08 IST