As we travel
on roads, we see hundreds of motor vehicles of various hues – and sadly there
are accidents too .. .. .. Motor vehicle accidents are one of the major causes
of death and injuries in India. By some statistics citing Ministry of Road
& Transport, around 1.5 lakh people die every year in five lakh road
accidents in the country. Motor
Vehicles Act 1988 covenants various aspects of automobiles on road. .. .. it
could undergo a lot of changes with the proposed amendment.
This post is on
a landmark judgment by Hon’ble Justice S Vaidyanathan in a recent case before
Madras High Court in an appeal filed by an Insurer. The cause of action relates
to an accident that occurred on 3.8.2016 near Hogenekal .
For the benefit
of all, a couple of Sections of MV Act 1988 are (partially) reproduced here :
146. (1) No
person shall use, except as a passenger, or cause or allow any other person to
use, a motor vehicle in a public place, unless there is in force, in relation
to the use of the vehicle by that person or that other person, as the case may
be, a policy of insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to carry, dangerous
or hazardous goods, there shall also be a policy of insurance under the Public
Liability Insurance Act, 1991.
147. (1) In
order to comply with the requirements of this Chapter, a policy of insurance
must be a policy which— (a) is issued by a person who is an authorised insurer;
and (b) insures the person or classes of persons specified in the policy to the
extent specified in sub-section (2)— (i) against any liability which may be
incurred by him in respect of the death of or bodily injury to any person
including owner of the goods or his authorised representative carried in the
motor vehicle or damage to any property of a third party caused by or arising
out of the use of the motor vehicle in a public place; (ii) against the death
of or bodily injury to any passenger of a transport vehicle, except gratuitous
passengers of a goods vehicle, caused by or arising out of the use of the motor
vehicle in a public place.
In 1980s,
there were broadly 3 types of policy coverages in Motor Insurance : Act only
policy; Third Party insurance and Comprehensive Policy. Act was almost out of vogue. For Two wheelers Act only premium was Rs.40/-;
for Third Party it was Rs.48 and for comprehensive Rs.48 + premium charged on
SI. TP Policy offered slightly increased
coverage than Act.
Now there
typically are two : Liability Only & Package Policies. Liability are Act Policies that cover the insured’s
Third Party Liability for bodily
injury and/ or death and Property Damage. Package policies are Comprehensive
policies that besides TP liability cover the OD ie., damage to vehicle also.
Both the policies extend to cover Personal accident to owner-cum-driver of
vehicles. There are very many variants – additional coverages
known as ‘Add-ons’ .. .. . and in tune
with times, there is coverage available for stand-along ‘own damage’ if TP
cover otherwise exists !
For long there had been
extention of Personal accident covers (not compulsory and not envisaged in
Act). GR 36 of India Motor Tariff
mandated provision of Compulsory
Personal Accident on every policy be it ‘Act only’ or Comprehensive. Earlier the SI under this section was 1 lakh
only for 2 wheeler/ Private car and 2 lakhs for commercial vehicles. By an order - Madras High Court in CMA
1428/2017 – United India Vs R Rekha & Ors directed IRDA to enhance the CPA
(Compulsory Personal Accident) to minimum
of 15 lakhs to ensure that motor vehicle
accident victim is adequately compensated.
Consequently IRDA had to amend coverage to a min of 15 lakhs. Initially
the premium was Rs.750/- then brought down to Rs.330/- + GST. Here too, any person owning multiple vehicles
had to take coverage in every policy covering the vehicle, as the CPA in any
way was restricted to usage of the vehicle insured and would not contribute
when the vehicle insured is not involved. So, Insurers introduced standalone CPA
policy.
Now the
judgement of Honble Justice S Vaidyanathan is talked about because of the
directive that “ all vehicles sold after September 1, should have
bumper-to-bumper insurance cover for five years mandatorily” that whenever a
new vehicle is sold after September 1, 2021, it is mandatory for coverage of bumper to
bumper insurance every year, in addition to covering the driver, passengers and
owner of the vehicle, for a period of five years. Justice
Thiru S Vaidyanathan passed an order
while hearing a writ petition from the New India Assurance Company Limited,
challenging the orders of the Motor Accidents Claims Tribunal, Special District
Court given on December 7, 2019 in Erode.
Some details on this .. ..
this was a Civil Misc Appeal preferred by New India Assurance Co Ltd, challenging
award of MACT Erode – K Parvathi and others being Respondents. The Tribunal had directed the Insurer to pay
compensation of Rs.14,65,800/- as compensation of death of deceased Sadayappan
@ dhanapal on 3.8.2016.
Before the Tribunal,
Insurers agitated that the Policy was ‘Act Only’ policy and as per insuring
terms, the Driver-cum-Owner would be
entitled to a sum of Rs.1,00,000/- and for the purpose of claiming
compensation, it has been stated in the Claim Petition that Sadayappan @
Dhanapal was driving the Car. It was further stated by the Insurance Company
that the deceased Sadayappan @ Dhanapal was not at all a driver of the vehicle
at the time of accident, as the vehicle was originally driven by the 4th
respondent herein. It was stated that
not a single pie was paid as premium for passengers and hence there was no
coverage.
Upon appeal, the High
Court stated that not even a pie has been paid towards premium with
regard to driver and for other passengers and the stand taken in the Claim
Petition filed before the Tribunal was in total contra to the contents in the
F.I.R., marked as Exhibit-A1 on the side of the Claimants. That being the case,
the Tribunal completely erred in granting compensation only on the ground that
the conditions of the policy have not been produced. In fact, the Tribunal
should have rejected the claim petition for non-filing of the details of the
Policy by the Claimants, as it was claimants, who had approached the Tribunal,
with unclean hands, by taking a different stand. Hence,
I am of the view that the award of Tribunal is liable to be interfered with and
set aside.
Accordingly, the Civil
Miscellaneous Appeal is allowed and the Award of the Tribunal is hereby
set aside. It is made clear that this order will not preclude theClaimants and
others from claiming compensation for the death of the deceased from the owner
of the Car / 4th Respondent herein, who also travelled in the Car along with
them, in terms of the judgment of a Division Bench of this Court (supra)
Before
parting with this judgment, it is saddening to point out that when a vehicle is
sold, the purchaser / buyer is not clearly informed about the terms of policy
and its importance. Similarly, at the time of buying the vehicle, the buyer is
also not interested in thoroughly understanding the terms and conditions of the
policy, as he/she is more concerned about the vehicle's performance and not
about the policy. When a buyer is ready to pay a huge amount for purchase of a
vehicle, it is really shocking as to why the buyer is not interested in
spending a paltry sum to take a policy so as to safeguard himself/herself and
others.
13. Therefore, this Court directs that whenever a new vehicle is sold after
01.09.2021, it is mandatory for coverage of bumper to bumper insurance every year, in addition to covering the
driver, passengers and owner of the vehicle, for a period of five years. Thereafter, the owner of the vehicle must be cautious in
safeguarding the interest of driver, passengers, third parties and
himself/herself, so as to avoid unnecessary liability being foisted on the
owner of the vehicle, as beyond five years, as on date there is no provision to
extend the bumper to bumper policy, due to its nonavailability.
In view of
untoward incidents like the present one on hand, then order shall be circulated
by the Additional Chief Secretary, Transport Department, Chennai, to all the
Insurance Companies and the said Officer must ensure that the above direction
is followed scrupulously in letter and in letter and spirit without any
deviation. The Hon’ble Court further
listed the matter for reporting
compliance on 30.09.2021.
The intention of
the Judgement is noble and is landmark in providing coverage as appropriate. Perhaps the intention is to provide mandatory
coverage for Third party property / persons as envisaged in MV Act + compulsory
personal accident for driver, and all passengers – still insuring the vehicle
could be an individual choice ! . Moving slightly
away, perhaps some of the words do not perhaps rightly represent the intention.
Theoretically,
every Comprehensive policy provides coverage for the vehicle totally from its
front shield to bumper covering all its parts in toto – yet ‘bumper to bumper
insurance’ is a fancy term in Motor Insurance.
Normally in a
Comprehensive coverage, own damage portion is subjected to depreciation that is
deduction towards usage / wear & tear.
Every part including the automobile depreciates in value arising out of
natural wear and tear due to its age. The
older the vehicle, the higher is the depreciation. According
to the Insurance Regulatory and Development Authority of India (IRDAI),
following are the depreciation rates, on the basis of which the total
depreciation of your car is calculated: Rubber,
Nylon, and Plastic Parts, and Batteries: 50%; Fiber Glass Components: 30%; Wooden Parts: 5% in the first year, 10%
in the second year, and so on.
What is promoted as ‘Bumper-to-Bumper’
in reality is ‘Nil depreciation’ coverage ie.,
policy that provides a 100% coverage of damages to the fibre, metal, and
rubber parts of your car. Some call it Zero Depreciation while others thrive as Bumper to Bumper Insurance – there are still
some exclusions in the nature of coverage for batteries and tyres; bi-fuel kit,
gas kits and the mechanical breakdown of the car. This coverage would not cover engine damages caused due to the leakage
of the fuel or water ingression. In case, a change in the fuel of the car is
made, that expense is also not covered by such insurance policy. Some Insurers have a separate add-on - Engine Protection.
Before concluding the
limit prescribed under Act for Third
Party Property Damage (TPPD) Cover is Rs.6000/- only while Motor vehicles
Insurance policies offer coverage of Rs.7.50 lakhs under this for Commercial
vehicles and Private cars and Rs.1 lakh for Motorized Two wheelers.
One shall wait to see the response of various
stakeholders to the Court Judgement – there could be some practical issues as
Insurers are presently providing long-term coverage for Act only section and
reduced one for Own damage portion – there is now provision for taking coverage
for Act Only as also Own damage portion alone too.
Look forward to your views and comments
29th Aug 2021.
No comments:
Post a Comment