A Guide to Understand Knock-for-Knock Agreement 


As per the Motor Vehicle Act of 1988, it is compulsory to have an insurance policy for your motor vehicles in India. Broadly, there are two kinds of car insurance policies, own damages insurance policy and third-party insurance policy. Furthermore, there is another type of insurance policy- comprehensive car insurance plan. This policy offers enhanced protection as it covers third party liabilities as well as own damages.

A third-party car insurance policy is obligatory for all motor vehicles plying on the road in India. This policy entails that all damages caused by you to a third person’s vehicle or property in an accident are covered by the insurer. Expenses arising due to injuries, disability, or death of a third party can also be covered in this car insurance.

If you have met with an accident with absolutely no fault of yours, then the person who is responsible for causing an accident should pay the repair bill. But such situations rarely occur. Here’s why it is so rare. The person who has caused the accident is required to be proven guilty by the court. This is a very expensive and lengthy procedure. Thus, most people avoid these hassles.

What is a Knock-for-Knock Agreement?

All the insurance companies understand the hassles behind the claim process that are related to third-party claims. 

As a result, all the non-life insurance companies, on a yearly basis, must compulsorily and without fail sign an agreement with other insurance companies. General Insurance Council of India has developed a knock-for-knock agreement for all the insurers. This agreement entails that all the insurance companies are willing to pay for the injuries caused to the people if the parties involved have an own-damage cover. This is valid only if they agree to utilise the third-party car insurance cover of the driver who was guilty of causing an accident. It can be viewed as an agreement between insurance providers that agree to pay for damages caused to vehicles that are insured by the respective companies rather than blaming other companies.

Why is a knock-for-knock agreement necessary?

If we take a look at the tedious process that filing third-party insurance claims bring, then this agreement seems like an easy way out. It becomes hassle-free cause there is no involvement of policy and courts. A knock-for-knock agreement is not made compulsory by the law, but it is followed as a mutual agreement between insurance companies.

What is the impact of a knock-for-knock agreement?

This kind of agreement is created to avoid the delay caused due to processes followed by police or court hearings. These hearings and procedures usually take months and sometimes years. It definitely saves people involved in an accident a lot of hassles it takes to file an FIR. Having said that, the most important thing is that it becomes much faster to process your claims after an accident without having to wait or keep your vehicles damaged.

Buying and possessing own-damage car insurance is always recommended. Own-damage car insurance covers third party damage expenses as well as takes care of your own vehicle in times of an accident. Be wise and make sure to keep yourself and your cars insured before plying the streets and be worry-free.