FASTag made essential for third-party car insurance purchase since April 2021

Posted on: Sep 16, 2021 | 3 mins | Written by: HDFC ERGO Team

FASTag made essential for third-party car insurance purchase since April 2021

All You Need to Know About Mandatory FASTag for third-party car insurance purchase- Car Insurance

The world is getting digitised at a rapid rate, and the pandemic has done everything to fuel this trend. In fact, during the last few years,digital payments have become more popular than ever and this is a key reason why governments across the world are digitisingtoll and tax collection as well. In India, the recent introduction of FASTag has been a major step towards the adoption of digital and wireless technologies,to make your highway rides a bit smoother and to weed out shrinkage and revenue pilferage. The government of India, aided by participating banks and the National Highways Authority of India,has made FASTag mandatory for all four-wheelers since early 2021.Cash-based toll collection has been limited to one lane at a toll plaza with double charges when payment is made in cash.

More on FASTag and how it works

FASTag is a sticker that contains an RFID chip which responds to an RFID reader and has data stored in it. The FASTag chip is encoded with data related to the vehicle and the FASTag account is linked with the issuing bank.The FASTag reader device scans the vehicle and account data from the RFID tag pasted on the windshield. The toll plaza server then contacts the issuing back, which sends the payment to the toll collector. Upon receiving the payment, the toll collector issues the toll payment acknowledgement and allows your vehicle to pass through the toll plaza. All this happens over the internet and in a matter of milliseconds. Compare this to the 2-3 minutes that every person spends making toll payment at toll plazasevery time!

Basically, millions of man-hours are getting saved with FASTagand toll plaza operating costs have also gone down considerablyover the years. In fact, completely unmanned toll plazas might be a reality in future aided by GPS and geo-sensing satellite tech.

The need for FASTag:

There are multiple reasons why FASTagwas deemed as a necessary technology:

The Indian government is encouraging everyone to shift to digital payments.
Queues at toll plazas were getting too long, leading to unwanted wastage of time and fuel.
Revenue pilferage was a frequent problem at toll plazas, leading to massive cumulative losses.

Future plans for FASTag

While most people think that FASTag is just a toll collection system, there are many other added features and use cases that the government has been considering, now that FASTag has been made mandatory and has already seen wide acceptance. Some of the new use cases of FASTag include the following:

The government is considering FASTagas a mode of payment at fuel stations, so you will be able to pay for petrol, diesel or CNG using your FASTag.
Similarly, the government is trying to set up more and more electric vehicle charging stations, where FASTag can be used to pay for vehicle charging.
There are plans to link FASTags to GST eWayBills. With this, the government will be able to track commercial vehicles in the state without the need to put up physical barriers. This is going to help track commercial vehicles that are deviating from their authorised route and might be involved in unlawful movement of goods.

FASTag and Insurance

Considering the growing role of FASTag in both private and commercial four-wheeler mobility, its connection with vehicle insurance is something that cannot be ignored. Most of the road accidents in India occur on highways and FASTag is primarily meant for making highway travel smoother and safer. This is the reason why FASTaghas been linked with the vehicle insurance system in the country.

FASTagis now mandatory for third-party insurance

From April 1, 2021 FASTaghas been made mandatory for purchase of third party insurance for vehicles. As you are already aware, at least a third-party policy is mandatory to drive a vehicle in India on a public road. On September 3, 2020, the Ministry of Road Transport and Highways issued a press release which said that a valid FASTag will be made mandatory for anyone getting new third-party insurance as the FASTag ID of the vehicle will be captured along with other data in the vehicle insurance policy. Hence, from this day onward, if you arebuying car insurance online, you will be required to submit FASTag data of your vehicle. Failing this, a new policy may not be available.

To cut a long story short, the integration of FASTag with third-party vehicle insurance is going to improve the policy administration as well as increase the accuracy of the work done by the Motor Accident Claims Tribunal. Further plans can also be explored for automatic renewals of third-party insurance policy where payment can be made via FASTag. This will solve the problem of vehicles plying without insurance to a considerable extent.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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