Bengaluru edition of TOI on 20.12.2021 carried an article titled : ‘Vehicle registration certificate transfer enough to get insurance cover’ –may not have been appropriately worded but very relevant for Insurers, insuring public and those connected with all these including YOU & ME owning automobiles.
Every road in Chennai [be it every other Metropolis] are clogged with vehicles of various hues – two wheelers, autos, cars, taxis, trucks, buses and other miscellaneous vehicles. The definition of ‘Motor vehicle’ as per Act is : Any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted from an external or internal source. The increased traffic in roads also inversely increases the road accidents – road accident victims can claim for compensation in MACT –every MACT OP is but gory details of the tragic circumstances – human lives are precious and every such accident snatches not only life / or damage to limbs besides bringing untold hardship of financial strain, suddenly making the dependents defend themselves in the cruel World. The Govt aims to provide some monetary compensation as a recompense - Motor vehicle insurance law in India is governed by the Motor Vehicles Act, Insurance Act and the like.
Insurance is a contract – and for claiming any benefit under the contract of insurance, there are primary tenets – that of claimant being party to the contract (sometimes getting beneficial right to claim by virtue of assignment) and the claimant possessing insurable interest, contract being valid at the time of occurrence and .. .. operation of peril specified in the contract. Cars (automobiles) do change hands, they are sold .. .. and there are procedures / legal points in ensuring continuance of contract – transfer to the new owner !
First a cursory reading the news as reported in the paper :
Mysuru resident Abishek R Das, 25, purchased a Hyundai Verna car from Sheeba Robert in October 2019. On October 10, Das got the RC transferred to his name and planned to transfer the insurance paper within the stipulated 14-day period. But on October 12, his acquaintance drove the car and caused a serious accident, entailing repair costs of over Rs 6 lakh.
With the car’s policy under United India Insurance Company Ltd active from January 16, 2019, to January 15, 2020, in the name of its previous owner Robert, Das raised an accident claim. While a surveyor was sent to assess the car damage, the firm turned down the claim, stating there was no contract between Das and United India and it was not liable to pay.
Das approached the I Additional District Consumer Disputes Redressal Commission with a complaint against United India Insurance on August 7, 2020. His lawyer presented his case while the insurer’s Bengaluru representatives failed to appear. The insurer’s Chennai counterparts countered the case through their attorney who claimed that the complaint was false. The lawyer argued that the insurance policy was in the name of Sheeba, the first owner of the car, and Das was nowhere in the picture.
However, the consumer court cited Supreme Court verdicts in similar
cases where the second owner, as per section 157 of the Motor Vehicles Act,
enjoys certain benefits, including insurance cover, if he transfers the RC to
his name. The court pointed out the accident had taken place two days after the
RC transfer. In its verdict on
November 18, 2021, the court held that the insurer repudiating Das’ accident
claim for an active policy is a clear service deficiency.
It asked the insurer to pay Rs 6,58,432 with interest towards car repair and additional sums of Rs 25,000 (for causing inconvenience), Rs 25,000 (damages) and Rs 10,000 (court expenses).
Every case is a learning and here too there are some ambiguities .. .. there is codified statue – Motor Vehicles Act 1988. The 1988 Act requires issuance of a Certificate of Insurance by the insurers as proof of Third party insurance to satisfy the requirements of Chapter XI of the Act. The Certificate of Insurance Form 51 must be in the form prescribed under the Motor Vehicles Rules framed under the Act. Certificate is to be issued by the “Authorized Insurer and Authorized Government insurance Fund” who are authorized to do general insurance business in India. Certificate of insurance includes Cover Note and Policy of Insurance includes ‘Certificate of Insurance.”
In this
context another Section of MV Act is very relevant. Sec 157. Transfer of certificate of
insurance.
1. Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.
2. The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
The Motor Vehicles Amendment Act, 1994 added an explanation in Sec. 157 (1) stating that such deemed transfer shall include transfer of rights and liabilities of the said Certificate of Insurance and Policy of Insurance. However Supreme Court of India has held in 1996 and in various instances that the automatic transfer is only for Third Party risks and not the Own damage portion i.e. damage to the vehicle cover.
Thus it is clear and apparent that the new owner would not get insurance protection straightaway – will have to apply and if not within the stipulated period of 14 days, most Insurers insist on inspection of vehicle, excluding existing damages and perforce payment (recovery) of NCB (if any) granted to the original insured as the buyer / transferee is not entitled. However, in the instant case, going by the details available, it does appear that accident occurred within the period of grace as allowed by Statue itself and perhaps benefits should have been provided, without need for agitating in a Forum.
In the end, the Consumer Forum has directed the Insurer to pay the full value of the claim besides imposing a penal cost too, which could have been avoided.
Look forward to the views of legal experts ! – you may post your views in comments section of my blog or email me at samvijb17@gmail.com
21.12.2021
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