The Insurance Regulatory Commission of Sri Lanka (IRCSL), in collaboration with the Ministry of Transport & Highways and key stakeholders in the transport sector, has implemented the Optional Compensation Scheme (OCS) to compensate for death or permanent disability of third-party victims due to motor vehicle accidents. This innovative scheme marks a significant milestone in the Sri Lankan insurance landscape of providing compensation without the admission of liability.

Who are eligible to obtain compensation under this scheme?‍

Third Party victims, mainly pedestrians and cyclists who are deceased or permanently disabled due to motor vehicle accidents occurred on or after 01^st March 2024 or their legal heirs are eligible for compensation under this scheme.

Who are the parties not eligible to obtain compensation under this scheme?

• Drivers, employees and passengers of motor vehicles.
• Persons who collide with motor vehicles intentionally to obtain compensation.
• Persons who die or become permanently disabled as a result of an accident of a motor vehicle involved in an act of riot or terrorism.
• Parents/Legal heirs in the event of death of a minor

Who provides compensation? ‍

Compensation is granted by the insurance company that has insured the motor vehicle which caused the accident. Such motor vehicles should have at least a third-party motor vehicle insurance policy issued by a general insurance company licensed by the IRCSL.

How to apply for compensation?

The application provided in Circular No.03 of 2024 issued by IRCSL should be filled in and submitted with the required documents specified in the Circular to the relevant insurance company. The application should be made by the third-party victim or his/her legal heirs.

To whom is compensation paid?

Compensation will be paid to the third-party victim or his/her legal heirs.

How much is the compensation?

In the event of death, Five Hundred Thousand Rupees (Rs.500,000/-).

In the event of permanent disability, up to a maximum of Five Hundred Thousand Rupees (Rs. 500,000/-), subject to the percentages mentioned in the said Circular.

What are the conditions for obtaining compensation?

• Death or permanent disability should be a result of a motor vehicle accident;
• Death or permanent disability should occur or should have commenced to occur within 12 months from the date of the accident.
• The application for compensation should be submitted to the relevant insurance company within 6 months from the date on which the death or permanent disability occurred.‍

Can a person seek compensation from Court after obtaining compensation under this scheme?

Yes. In cases where the victim or his/her legal heirs are of the view that compensation under this scheme is not sufficient, it is possible to file a case in Court and seek appropriate compensation under the existing legal system of the country.  ‍‍‍

Application and full details of the OCS can be found in Circular No: 03 of 2024 issued by IRCSL. Please visit IRCSL website http://www.ircsl.gov.lk/ or contact our hotline 011-2396188 for more details.