No-Fault Liability: Meaning, Example and How It Works in India

What does No-Fault Liability mean?

No-Fault Liability under Section 140 of the Motor Vehicles Act provides interim compensation to road accident victims without proving fault. It is payable on top of any further compensation a consumer redressal body may award. From 2022, it is Rs 50,000 for death and Rs 25,000 for permanent disability.

For most Indian car owners, knowing No-Fault Liability matters at the moment of buying a policy or filing a claim. The term shows up on the policy schedule, on the claim form and on the renewal proposal, often in fine print that first-time buyers do not notice until something goes wrong.

HiZuno publishes this glossary so that customers and small-business owners can decode the language of motor insurance in plain English. As of 2026, every entry reflects current IRDAI and MoRTH rules and the prevailing practice across providers in India.

How No-Fault Liability applies in India

The no-fault payout is a fast-track interim relief. The full liability claim then proceeds at MACT, where fault is determined and any additional compensation is awarded. The provider of the at-fault vehicle pays both the no-fault sum and any subsequent consumer redressal body award.

A real-world example

A Delhi pedestrian killed in a road accident is paid Rs 50,000 within weeks under no-fault liability. The full MACT claim, which may award Rs 8 lakh to Rs 30 lakh, proceeds separately over several months or years.

Common misconceptions

Why No-Fault Liability matters for the consumer

No-fault liability gives families immediate relief in tragic situations. Knowing this exists helps families file early without waiting for the full MACT process.

How to handle No-Fault Liability in practice

A simple, repeatable approach helps you stay in control whenever No-Fault Liability shows up in your policy paperwork or claim conversation.

• Confirm the basics: verify that No-Fault Liability is reflected correctly on the policy schedule before you pay premium.
• Cross-check with IRDAI norms: the regulator publishes the framework that governs No-Fault Liability, so compare what your provider has filed.
• Read the policy wording: the binding contract spells out limits, exclusions and conditions in detail beyond the marketing summary.
• Document everything: keep digital copies of the policy, RC, driving licence and KYC, since most disputes turn on documentation.
• Ask before you assume: a 60-second call to the provider clarifies whether No-Fault Liability applies to your specific situation.

Related glossary terms

Frequently asked questions about No-Fault Liability