Skip to main content

Motor Insurance: Comprehensive insurance covers car occupants and pillion riders

INSURANCE companies have been capitalising on the misperception that a comprehensive motor insurance policy (CIP) does not cover persons travelling in a car or sitting astride the pillion of two-wheelers. Most consumers believe the policy only covers loss or damage to the vehicle and third party accident claims.

When vehicle owners want passengers to be insured, the insurer charges an additional premium, although they get covered, by default, under a CIP. There have been instances when the vehicle owner has been personally held liable to pay compensation to the injured passengers. This because the insurer misled the courts about the scope of a CIP.

This deceit got exposed when the Delhi High Court looked into a judgement passed by Justice JR Midha in the case of Yashpal Luthra & Anr versus United India Insurance Co Ltd & Anr.

Vinod Luthra, 24, was sitting astride the pillion of a motorcycle being driven by his friend, Umed Singh Mateyee. Their bike got hit by an unknown vehicle. Luthra fell down, suffered fatal injuries and died. The bike was covered under a CIP issued by United India Insurance. Luthras parents and widow filed aclaim before the Motor Accident Claims Tribunal (MACT) against the insurer and the vehicle owner.

The insurer defended by contending that a pillion rider could not be termed as third party. Hence, the CIP did not cover the pillion rider. Accepting this, the MACT exonerated the insurer, but held the vehicle owner solely liable to pay the claim, pegged at `453,300. The Luthras appealed to the Delhi high court against this order, urging the insurer also be liable. They also pleaded for increasing the amount awarded by the MACT.

The high court framed the case thus: Whether, under a CIP, the insurer is liable to compensate for the death or injury of a pillion rider or the occupants in acar? This was to be considered in the light of the policy terms and conditions, which provide that, subject to the limits specified, the insurer would indemnify the insured in respect of death of, or bodily injury to, any person, including the passengers. In case the occupants are being carried for hire, the insurer would not be liable. Similarly, if the passenger is an employee (or driver), the insurer would also not be liable.

To determine this issue in accordance with the directives of the Tariff Advisory Committee (TAC) and that of the Insurance Regulatory Development Authority (Irda), the high court considered it necessary to examine officers from the insurance company, TAC and Irda.

The court also examined M A Kharat, general manager of United India Insurance, who admitted the company was liable. Kharat further stated that on 16.11.2009, Irda had issued a circular to all insurers, reiterating that under CIP, they were liable in respect of a pillion rider and the occupants in a car. Kharat admitted to another wrong stand taken by the insurer before the Supreme Court in another matter. He said he would instruct the companys advocate to clarify to the court the correct legal position, thus admitting the liability of the insurer.

The Irda informed the court it had convened a meeting of all public and private insurers, where this issue was discussed, and a consensus reached that insurers were liable for claims of occupants of vehicles and pillion riders under a CIP. So, it was decided, in cases where a contrary plea had been taken, the lawyers and the operating officers would be informed within seven days to correct their stand.

Justice Midha also expressed hope that a large number of pending cases all over the country would come to an end, and the claimants who have been denied compensation shall get their legitimate due.

The impact can be best summed up in the courts observation that a non-issue had been turned into an issue.

Popular posts from this blog

Retirement planning from a long-term perspective

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds     `HOW green was my valley'. This title comes from a movie I had watched many years ago. A little boy's journey into adulthood and the story of a Welsh valley's turn of-the-century descent from pristine paradise to despoiled coal mining.   I thought of the title because it is comparatively reflective of a person's life ­ the glorious years when he is earning and the sun down years when he is not having his regular job and, hence, his living standards comes down. The reason is a combination of things. Inflation of food items, transport, increase in health related costs in the later years of life and increase in expenses in almost all basic amenities of life. In India, the social security system is almost non-existent. In some states, wherever it is available, the scales of benefits are extremely modest...
Read more

LIC's JEEVAN SHIKHAR

  LIC's Jeevan Shikhar is a participating, non-linked, saving cum protection single premium plan wherein the risk cover is ten times of Tabular Single Premium. The proposer will have an option to choose the Maturity Sum Assured. The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured. This plan also takes care of liquidity need through its loan facility. The plan will be open for sale for a maximum period of 120 days from the date of launch. 1.   BENEFITS   : a) Death Benefit: On death during first five policy years: Before the date of commencement of risk   :   Refund of Single Premium without interest. Single Premium mentioned above shall not include any extra amount if charged under the policy due to underwriting decision and taxes. After the date of commencement of risk   : "Sum Assured on Death" equal to 10 times the tabular single premium shall be payable. On death after completion of five policy years but b...
Read more

Investment Strategy - What is Sector Rotation Theory?

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   The economy goes through cycles : it expands for a few years and then contracts. Study of historical data suggests that different sectors tend to perform well on the stock markets during different stages of the economic cycle. While history never repeats itself exactly, some broad patterns tend to recur. Investors can take advantage of the sector rotation theory to move their money from those sectors that have seen their best times to those that are likely to do well in future.   The person who developed the sector rotation theory is Sam Stovall, chief investment strategist at Standard & Poor's. He developed this theory by studying data on economic cycles going as far back as 1854 provided by the National Bureau of Economic Research ( NBER ) of the US.   When trying to correlate stock-market perfor...
Read more

Rajiv Gandhi Equity Savings Scheme (RGESS) set for launch this week

The finance ministry is set to notify the Rajiv Gandhi Equity Savings Scheme ( RGESS ) this week.   Though Finance Minister PChidambaram had approved on September 21, the scheme announced in this year's Budget, and had said that the revenue department will notify the scheme and the Securities and Exchange Board of India ( Sebi ) would issue relevant circulars within two weeks, it is yet to become operational.   A senior finance ministry official said the revenue department was expected to notify the scheme any day now to attract retail investors to the equity segment.   He added that Sebi was not required to issue any circular for the operationalisation of the scheme and that after the issuance of the revenue department's notification, investors would be able to avail of the benefits of the scheme.   The official accepted that implementation of the scheme had been delayed due to the deliberations on inclusion of mutual funds ( MF ) in it.   ...
Read more

CNX Midcap vs BNP Paribas Midcap Fund

BNP Paribas Midcap Fund - Invest Online   Te  performance of BNP Paribas Midcap Fund  – which has across the last 3 years generated superior returns over the benchmark – especially when the markets have gone down the fund has handsomely outperformed the benchmark preserving the capital of the investors. The fund has been able to do this only due to the superior stock selection process ( BMV approach) that is diligently followed at BNPP.   Highlights of BNP Paribas Mid Cap Fund:   Investment Objective : BNP Paribas Mid Cap Fund gives an investor exposure to invest in the various quality midcap stocks. The fund also has some exposure to large as well as small cap stocks.   Investment Approach : BMV ( Quality and scalability of Business →Good Management → Reasonable Valuation ) with Bottom-up stock picking.   Most of the investors are way happier if the fund that they have invested in is a significant Outperformer in tough times than in Good ti...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now