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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Nifty F&O

  1. What is a straddle? A strategy using Nifty options usually before a major event or when one is uncertain of market direction. Comprises purchase of a Nifty call and put option of the same strike price. Usually strikes are purchased closer to the level of the underlying index. 2. What is better ­ buying or selling a straddle? It depends.Implied volatili ty of options, or near-term expectations of price swings in an un derlier like Nifty , usually peaks before an event and falls when the outcome plays out ­ like Infy re sults in past years. However, once the event plays out, a sharp rise or fall in Nifty could result in price of the straddle rising ­ benefiting buy ers. But, normally , those who sell or write options charge hefty premiums from buyers in the hope that fall in volatility would ensure the options end out-of-the-money, hurting buyers. 3. So, do straddle sellers end up winning most of the time? Yes. That's invariably the case when market volatility is trending on the...
Read more

JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300 JP Morgan launches Emerging Markets Opportunities Equity Offshore Fund    The new fund offer opens for subscription on 16 th June and closes on 30 th June. JP Morgan Mutual Fund today announced the launch of its open end fund of fund called Emerging Markets Opportunities Equity Offshore Fund. The fund will invest in an aggressively managed portfolio of emerging market companies in the underlying fund - JPMorgan Funds - Emerging Markets Opportunities Fund, says a JP Morgan press release. Noriko Kuroki, Client Portfolio Manager, Global Emerging Markets Team (Singapore), JPMAM said, "Emerging markets have been out of favour for several years, as growth decelerated and earnings struggled. However, in a world of globalisation, we believe that EM will eventually re-couple with DM, leading to the long-aw...
Read more

Good time to invest in Infrastructure Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...
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