If you have a vehicle in India, it is mandatory by law to get an insurance for it. Not having a car insurance could mean an imprisonment upto 3 months and a fine of ₹2000. But why?
- You need seat belts for safety during road accidents.
- You need a pollution certificate to keep in check that your vehicle is not contributing to air pollution.
- You should not drink & drive for yours and other's safety.
- The law does not permits you to drive without a license.
- You need an RC to accomplish that it is your vehicle that you are driving.
All the above facts make sense, and so you can understand why there are fines against not following them while driving on the road.
But what about a car insurance? Why is it mandatory in India to have one? Why are you fined for not having one? And why do you need to renew it every year?
The answer is-
"According to a mandate in the 1988 Motor Vehicles Act, a motor vehicle entering a public space should have an insurance to cover any damage it causes to the life and property of others."
If your vehicle causes any kind of damage to life or property while on road, you are held responsible to pay for those damages. Your vehicle insurance company makes sure that all liabilities are paid for.
You can obviously cover those expenses right out of your pocket, but that does not give a surety to the second person that his damages would be paid for. Therefore, the law makes it mandatory for every vehicle owner to have his/her own insurance to cover for any mis-happenings that occur on the road.
This way, you stay sure that your vehicle and your pocket is safe, and your insurance company is there to take care of any liabilities that may fall upon you, or a third-party.
Or, as simply you can say, "Better safe than sorry."