Directions by Supreme Court – Motor Vehicles Act, 1988 – s.146 – Insurance policy covering third-party risks – Lack of compliance with – Ensuring compliance with statutorily mandated insurance – Directions issued – To be enforced through the Ministry of Road Transport and Highways (MoRTH) and Insurance Regulatory and Development Authority (IRDA): Held: Currently, Automatic Number Plate Recognition (ANPR) Cameras deployed on highways and roads are equipped with a mechanism to catch and penalize road safety violations such as high speed, red light jumping, driving on the wrong side of the road, etc – Carrying this forward and as already deployed by the MoRTH in certain states, ANPR Cameras are to be integrated with data from the Insurance Information Bureau (established under IRDA) and the VAHAN portal for issuance of automatic e-challans to uninsured vehicles, in furtherance of the SOP for Electronic Monitoring and Enforcement of Road Safety – As on date, there is no uniform mechanism in place with State Police to verify insurance status on the ground – State Police be provided with handheld devices or downloadable apps, linked with the data from Insurance Information Bureau (established under IRDA) and VAHAN portal be supplied to the State Police – This is to monitor real-time insurance status of vehicles and impose challans for violations, ensuring compliance with mandatory insurance on the ground – Upon notification of the amendment to s.196 of the MVA, strict compliance thereof is to be ensured – As submitted by the IRDA, for private vehicles, a broad four layer structure is to be implemented for private vehicles – This would bring clarity to various policy options for the vehicle-owner so as to allow them to make an informed choice – The structure is as follows: I. Third Party only policy- this policy shall be a base policy and minimum cover as required by s.146 of the MVA – The pricing thereof will be fixed by a consultative process between the IRDA and the Central Government – II. Additional optional cover for the occupant(s)/pillion rider (other than owner, driver and family of the insured)- this add on will be optional and available at an additional premium, covering occupant(s)/pillion riders of the insured vehicle – The pricing thereof will be determined by the respective insurance companies – III. Personal accident cover for the owner, driver and any occupant(s)/pillion rider- this add-on will cover personal accident i.e. death and/or permanent disability of the occupant(s)/pillion riders of the insured vehicle including owner, driver and family of the insured – The pricing thereof will be determined by the respective insurance company – IV. Own damage cover- This add-on cover will cover liability for loss or damage to the insured vehicle itself – Consequently, every customer, at the time of purchase of insurance, will be issued a ‘customer option form’, whether offline or online, whereby they may ‘opt in’ via check box to the add-on options – The IRDA is at liberty to modify the template, if the need so arises – The IRDA in consultation with GIC and insurance companies, shall formulate uniform policy wordings for the aforesaid optional covers – The insurance companies may innovate the coverage and determine the pricing of the Own Damage covers, in consonance with market forces – The suggestion of the IRDA for a consumer-friendly customer information sheet will also have to be given to the prospective customers outlining the above four-layered structure, i.e., who is covered under mandatory and optional covers, is made mandatory for the sale of motor-vehicle insurance, whether offline or online – Henceforth, third-party insurance for four years for new cars and six years for new two wheelers be required to be purchased – IRDA to immediately issue necessary directions – The benefits of obtaining comprehensive motor-vehicle insurance policies to be displayed in easy-to-read format on the websites of the insurance companies – Based upon the deliberations in Court, a pilot-project be implemented allowing citizens to verify insurance status, and ultimately assist with the implementation of the statutory mandate under the MV Act – The insurance status to specify the kind of insurance, whether mandatory (third party only) insurance or comprehensive policy – The benefit is two-fold – At first, it will allow citizens to know whether the vehicle they are travelling in or sending goods in or transporting employees has valid insurance – Secondly, it will allow for prompt reporting of uninsured vehicles – The IRDA in consultation with the MoRTH, to deliberate and evolve a pilot-project whereby fuel for vehicles to be linked with valid insurance status – In the absence thereof, the vehicle concerned would be refused fuel at petrol pumps, until such time that valid insurance is obtained – The benefit therein is two-fold – Firstly, it will assist in identification of uninsured or unregistered vehicles – Secondly, it will prompt the owners of these vehicles to ensure that they have valid insurance status – Such projects would ensure ground-level compliance with the statutory mandate of s.146, MVA – This may be done through the use of ANPR cameras – In view of the number of road accidents on national highways and also the effect that long queues at toll plazas have on road accidents, the MoRTH is to implement the said pilot projects on certain corridors, substituting the process of stopping at toll plazas with automatic detection of vehicles passing through toll points – Insurance Regulatory and Development Authority Act, 1999 – Insurance Act, 1938. [Paras 23.1-23.11] Directions by Supreme Court – Motor Accident Claims – Average pendency of over four years in more than 50% of motor accident claim cases – Directions issued: Held: The State Police to promptly file Detailed Accident Report (DAR) along with relevant documents such as FIR, MLC, post-mortem report, insurance policy, permit, etc. before the concerned MACT, in pending cases relating to accidents prior to 31.03.2022 – State Police to assist with prompt service and production of relevant witnesses before the concerned MACT, to ensure speedy disposal of cases relating to accidents prior to 31.03.2022 – Directions to be forwarded by the registry to the Secretary, High Court Legal Services Authority of all High Courts, to be forwarded to the respective State Police. [Paras 24-24.2] Insurance Policies – Categories:
Held: i. Third-Party Liability Insurance- This insurance covers liability for injury, death or damage to property of third-parties – This type of insurance is mandatory u/s.146 of the MVA and is commonly referred to as Act Only Policy – It does not cover damage to the insured vehicle itself – ii. Comprehensive Insurance Policy- This type of insurance covers liability for injury, death, or damage to the property of occupants of both vehicles concerned – For instance, pillion riders of two-wheelers and other occupants of a four-wheeler are also covered under this insurance – iii. Own–Damage Cover- This is an optional standalone policy which covers damage to the insured vehicle due to accidents, fire, theft etc., depending on the terms of the policy – iv. Commercial Vehicle Insurance Policy- This policy covers vehicles which are used for commercial/business purposes – It covers third-party liability as well as damage to the goods being carried/occupants of the vehicle/damage to the vehicle itself – In addition to the aforesaid, there are various add-on covers that are offered by the insurance companies. [Para 13]
Motor Accident Claim – Deceased died when a lorry driven in a rash and negligent manner struck his car from the back side – Claim filed by respondents (legal representatives of the deceased) – Tribunal held them not to be entitled to any compensation – Appeal filed by respondents before High Court stating that the Tribunal had erroneously absolved the insurance company-insurer of the car of its liability to pay compensation to them – High Court allowed the appeal; awarded compensation of Rs. 10,00,500/- to the respondents along with 7.5% interest p.a. holding that the policy in question was a comprehensive policy and would cover the owner of the vehicle as well, who was travelling in the car as a passenger:
Held: In matters concerning motor accident claims, Courts should not adopt a hyper-technical approach – As rightly submitted by the respondents, in accordance with the circular of the IRDA dtd.16.11.2009, insurance companies are liable to compensate for any occupant in the vehicle under a comprehensive/package policy – No reason to disagree with the reasoning adopted by the High Court. [Para 34]
Insurance Regulatory and Development Authority Act, 1999 – Insurance Act, 1938 – Motor Vehicles Act, 1988 – Statutory framework under, discussed. [Paras 5-8]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey See: Surekha and Ors. v. Santosh and Ors. [(2021) 16 SCC 467].. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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