While the world was already on the path to digitisation, the COVID–19 pandemic has only speeded up the process. Keeping in line with the mainstream popularity of digitised payments, the Government in India has introduced FASTag to make your highway rides more convenient. Since 2021, the National Highway Authority of India has made FASTag mandatory for four–wheelers.
What is FASTag?
FASTag is a sticker containing a Radio Frequency Identification (RFID) chip that can be read for data collection. The data collected contains details of the vehicle, and the FASTag account is linked with the issuing bank. A FASTag reader device can be used to scan the vehicle and date via the RFID tag. The toll plaza server contacts the issuing bank, which then transfers the payment to the toll collector.
When the toll collector receives the payment, they issue the toll payment acknowledgement and allow vehicles to pass through the plaza. This entire process takes less than a minute and gets completed online. Thus, it helps in reducing the time taken at the toll plaza and has also helped reduce toll booth operating costs. This decision has also been taken to ensure that 100% of fees are paid at toll plazas via electronic means, and vehicles can pass through without much hassle.
Is FASTag Compulsory in Third Party Insurance?
In September 2020, the Ministry of Road Transport and Highways announced via a press release that a valid FASTag is required for anyone to purchase a new third–party insurance policy. While third–party insurance has been mandatory in India, as per the Central Motor Vehicles Rules (CMVR), 1989, FASTag has also become mandatory and is supplied by vehicle manufacturers or their dealers. The authorities have made FASTag essential for purchasing third–party insurance through an amendment in Form 51 (certificate of insurance), wherein the details of FASTag ID shall be captured. This direction will be effective from April 2021 onwards.
How Does FASTag Impact Car Insurance?
With high populations and dense traffic, around 55 road accidents occur every hour in India. If you and your vehicle are ever involved in such a collision, you would incur significant financial expenses. Furthermore, if a third party or their vehicle is involved, you could become legally liable to pay for their losses. Having third–party insurance protects you from legal and financial liabilities if the third party is injured or dies or their vehicle is damaged.
Previously, you had to purchase third–party insurance via traditional mediums, which could take a considerable amount of time. However, today, you can purchase the required insurance with much more speed and convenience. FASTag will help improve the administration of car insurance policies and increase the accuracy of work undertaken by the Motor Accident Claims Tribunal. In the future, FASTag can also be used to facilitate the automatic renewal of third–party insurance wherein payments will be made via FASTag.
With such measures, FASTag could play a role in ensuring that vehicles are not on the roads without adequate insurance.
Disclaimer: The above information is indicative in nature. For more details on the risk factor, terms and conditions, please refer to the Sales Brochure and Policy Wordings carefully before concluding a sale.