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Why is Health Insurance not mandatory unlike Car Insurance?

Car insurance has been introduced in India with the Motor Vehicles Act, 1938 which states that it is compulsory to have a valid third party insurance to drive a vehicle on public roads. As the law suggests, it is mandatory for a vehicle owner to have at least third party bodily injury and property damage insurance to drive in a public place. The motor insurance was made compulsory in India in 1938, but the first car was introduced to India in the year 1897.


In the starting period when the cars were introduced in India only the Rich owned the cars. The number of cars operating was few and are only limited to the urban areas where there is well road connectivity. But in the 1930s the number of cars grew drastically and so the number of accidents. The victims of the car accidents were left to the mercy of the drivers as there was no strict law favouring the victims. This has led to the introduction of Motor Vehicles Act in the year 1938 which mandates third party insurance for every vehicle driven in public places.

The act had been revised time to time and the limits for death and disability of third party was fixed with changing times. In the starting the limits for death and disability were Rs.50k and Rs.25k respectively. But these limits have been removed with the amendments and only the third party property damage limit is set.

The main reason for introducing car insurance is that the victims of motor accidents were at the mercy of the car owners and most of the times owners were not ready to settle the claims as there was no law. The concern for the lives of third parties and their families led to the introduction of Car insurance in India.

Health insurance even though introduced long back in India has not become famous due to the below reasons:-

  • There were very few private hospitals where only the rich who could afford the treatment costs. Hence the requirement for health insurance was not seen by normal people.
  • Healthcare costs were very minimal in the early 70s and 80sexcept for the complicated surgeries.
  • Middle class and the poor people had access to Government hospitals where almost everything is free; hence there was no need to think of health insurance.

After the advancement in the medical technology the treatment costs have gone up and the need for health insurance has become visible as most of the treatments are not available in the government hospitals. So, people were forced to visit private hospitals to get treated which involves huge amount of amount. Without medical insurance it would be very difficult for a normal person to adjust such a huge amount of money.

The main reason for Car insurance to be compulsory is that the Third party victims are on the mercy of the owner whereas in the health insurance you are responsible for your own health.

Under the Motor vehicles act only the third party insurance is compulsory whereas the Own damage is optional. There were situations where the Owners of the car were not able to settle the claims of the victims which lead to the introduction of third party insurance. Indian government cannot force you to take something that is directly related to you and you are affected if it doesn’t exist. Expired car insurance leads to the movement of the car on the road without any valid insurance which is against the law.

For car insurance expired cases inspection can be done using the link sent by the insurance companies or physical inspection would be carried out based on the need. Without inspection most of the insurance companies would not accept the risk.

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