It is necessary to satisfy some conditions to get compensation under the Motor Vehicles Act. It is the liability of the insurer to give compensation against every genuine claim subject to satisfactory completion of procedures. In India it is not an easy task for common man to get insurance claim from insurance companies. But insuring the vehicle is a legal obligation and necessary to avoid any personal liability.
Compulsory Insurance of vehicles
The Motor Vehicles Act, 1988 like the earlier Act of 1939 makes the insurance of Motor Vehicles compulsory. The owner of Motor vehicle is bound to insure his vehicle against third party risk. The insurance company covers the risk of loss to the third party by the use of motor vehicle. If there is insurance against third party risk, the person suffering due to the accident caused by motor vehicle may recover compensation either from the owner or the driver of the vehicle or from the insurance company.
Driving uninsured vehicle - Section 196 of Motor Vehicles Act 1988
Whoever drives a motor vehicle or causes or allows a motor vehicle to be driven in contravention of the provisions of Section 146 shall be punishable with imprisonment which may extend to three months or fine which may extend to one thousand rupees or with both.
Requirements of polices and limits of liability- Section 147 of Motor Vehicles Act 1988
Section 147 has provision about the requirements of valid policy of insurance and also the limits up to which the insurer will be liable in respect of an insurance policy. As per section 147(1) in order to comply with the requirements of insurance a policy insurance must be a policy which
(a) Is issued by a person who is an authorized insurer; and
(b) Insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)
(1) Against any liability which may be incurred by him in respect of the death or bodily injury to any person, including owner of the goods or his authorized representative carried in the vehicle or damage to any property of third party caused by or arising out of the use of the vehicle in a public place against death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place
Commencement of insurer's liability
The insurer's liability commence as soon as the contract of insurance comes into force and remains operative during the operation of the policy. In case of renewal of an existing insurance policy, the risk is covered from the moment the renewal comes into force.
Nature and Extent of Insurer's Liability
The policy of insurance issued by an authorized insurer is;
To insure the person or classes of persons specified in the policy and the insurer is liable only towards the owner of the vehicle.
The insurer is liable to the extent specified in Section 147(2) and
The liability is for damage caused by or arising out of the use of the vehicle in a public place.
The position as regards each of the above stated points is:
Insurer's liability for third party risks-liability for injury to certain person or classes of persons other than gratuitous passenger and pillion rider
Section 95(1)(b) of Act of 1939 and Section of the Act of 1988 mention the classes of persons for damage to whom an insurer is liable under the Act . Such liability is for death or bodily injury or the damage to the property of third party or death or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of vehicle in a public place.
The Act policy covering only Third party risks as mentioned in Section 95 of Motor Vehicles Act 1939 or Section 147 of the Act of 1988 does not make the insurer liable for the harm suffered by a passenger traveling in a private car, neither for hire nor reward. Similarly it also does not cover the injury to a pillion rider on a scooter. If the owner of the vehicle so likes, he may take such a policy which covers risks not otherwise covered under the provisions of the Act.
Driving without driving licence
It has been held by the Punjab and Haryana High Court that the claimant's right to compensation would not be affected by the fact that the driver was driving without a driving licence. In another case it was ruled that the insurer cannot escape liability merely on the ground that the driver was driving without a proper licence.
Insurer's liability towards the owner of the vehicle
The insurance contracts is a personal contract between the insurer and the owner of the vehicle taking the policy, for indemnifying the insured for damage caused to a third party from the accident. To make the insurer liable, the insurance policy must be in the name of owner of the vehicle.
Who is an owner - Section 2(30)
As per section 2(30) owner means a person in whose name a motor vehicle stands registered, and if such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire purchase agreement or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under the agreement. Thus for the purpose of liability under the Motor Vehicles Act, the term owner means:
(1) A person in whose name the motor vehicle stands registered and
(2) A person in possession under a hire purchase agreement or an agreement of lease or hypothecation.
Effect of transfer of vehicle on insurer's liability
Under the Motor Vehicles Act, 1988, an insurance policy is deemed to be transferred in favour of the transferee of the vehicle, when the owner of the vehicle transfers the vehicle along with the insurance policy relating thereto.
Extent of liability of the insurer under Motor Vehicles Act 1988
As per section 147(2) of the Act the provisions are as follows:
"Subject to the proviso to sub-section (1), a policy of insurance referred in sub-section (1) shall cover any liability incurred in any accident, up to the following limits namely:
(a) Save as provided in clause (b) the amount of liability incurred
(b) In respect of damage to any property of a third party, a limit of rupees six thousand
Provided that any policy of insurance issued with any limited liability and in force immediately before the commencement of this Act, shall continue to be effective for a period of four months after such commencement or till the date of expiry of such policy whichever is earlier. Under the Act position is as under:
(1) For death or personal injury to a third party, the insurers liability is the "amount of liability incurred" i.e. for the whole amount of liability.
(2) For damage to the property of a third party, the insurer's liability is limited to Rs. 6,000/-, just as under the 1939 Act.
Insurer's liability for persons on the roof of a bus
According to Section 123 of the Motor Vehicles Act 1988 and Section 82 of the Act of 1939 no person should be carried on the running board or otherwise than within the body of the vehicle. Therefore, if a person is allowed to be carried by the conductor of a bus on the roof of the bus in violation of the above-mentioned statutory provision and in contravention of the terms of insurance policy and such a person dies in an accident, the insurance company is not liable to pay any compensation in respect of the same.
Contributory negligence - Traveling on rooftop- Driver and conductor of the bus and the deceased equally negligent and responsible for accident
Decisions pronounced in different cases make it clear that the driver, conductor and the deceased are equally responsible for the accident from traveling on the rooftop of bus.
Insurer's liability beyond the limits mentioned in the Act
There is no bar to an insurer undertaking to be liable for an amount greater than the one mentioned in the Act. The insurer's liability can be enhanced by a contract between the insurer and the insured.
Payment of compensation in case of hit and run Motor Accidents -Sections 161, 162 and 163 of Motor Vehicles Act, 1988
If there is a hit and run motor accident (un identifiable vehicle) there is a special provision for making payment of compensation. The compensation to be paid shall be as under:
(i) In respect of the death of any person, a fixed sum of Rs. 25,000/-
(ii) In respect of grievous hurt to any person a fixed sum of Rs. 12,500/-
Use of the vehicle
It is not necessary that the vehicle must be running. It is in use even when the battery is taken out of the vehicle is parked.
In public Place
It has been noted above that the insurer's liability under the Act can arise only in case there has been use of the vehicle in a public place. Public place means road, street, way or other place whether a thoroughfare or not, to which the public have a right of access and includes any place or stand at which passengers are picked up or set down by a state carriage.
Liability when vehicle not insured
If a vehicle is not insured for third party risk, the claimant still has the right to claim compensation., In such cases the responsibility will be fixed on the negligent driver or the owner of the vehicle, and such a person will have to pay the claim out of his own pocket. Similar is the position where a vehicle belonging to the Central or State government or a corporation is exempted from being insured under Section 146(2) and (3) of the Motor Vehicles Act 1988.
Notice to the insurer is necessary as per Section 96(2) of Motor Vehicles Act, 1939
According to Section 96(2) notice of proceedings through the court is required to be given to the insurer and the insurer to how such notice has been given is entitled to be made a party to the proceedings and to defend the action on any of the grounds mentioned in section 149(2) of Motor Vehicles Act of 1988.
Penalty under Income Tax Act 1961: Sections 158BFA(2)221(1), 271(1)(b), 271(1)(c), 271(1)(d), 271(4), 271A, 271AA, 271AAA, 271B, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FB, 271G, 272A(1), 272A(2), 272AA, 272B, 272BB