Insurers,
Insurance Agents, Insurance Brokers, Insuring public and other road users – must be
aware of a recent circular issued by IRDA on recently on 18.10.2023 (available
on their website) – here are some insights !! on Motor Insurance for understanding
that circular.
As we
travel on roads, we jostle in traffic -
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. Motor Vehicles Act 1988
covenants various aspects of automobiles on road. .. ..
The Act, inter-alia, makes vehicle insurance mandatory. Sec 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.. .. .. and there is Motor vehicle insurance.
In olden
days, life of Motor Insurer was spent more on reading and interpreting the
provisions of “AIMT” - wonder what ? –
All India Motor Tariff, the ultimate smrithi handed by Tariff Advisory
Committee laying down rules, regulations, rates, terms and conditions in
accordance with the provisions of part IIB of Insurance Act 1938. The AIMT was revised from time to time –
remember the big black book, it undergoing revisions in 1989 and present one
coming into vogue since 30th
June 2002. (likely that you had not joined Insurance industry by these dates !)
The succinct line
is : the provisions of the AIMT is binding on all concerned and any breach of
Tariff is a breach of the provisions of the Insurance Act 1938.
The Tariff was
elaborately codified with Sections of :
1) General Regulations (GR); 2
Private Car 3) Motorised two-wheelers 3) Commercial vehicles – sub divided as
Goods carrying, Trailers, Passenger carrying, Misc and Spl type, Motor Trade –
road transit, road risks and internal risks;
IMT endorsements, proposal forms; Standard wordings, Statistical codes
Sec 7 of AIMT deals with Endorsements. The present circular
of IRDA directly impacts this section, in specific IMT 29 that is about
coverage for employees travelling in a private car.
To provide you a
gist of its contents :
·
Clause 7 of Sec 2 of Tariff (reference is
to Private car) provides for coverage of employees travelling in a Car owned by
their Employer – being involved in an accident and the liability to the victims
ie., employees in that road accident or usage of that vehicle in public place.
·
Presently, Tariff provides for such
coverage (for employees travelling or
driving) at an additional premium of Rs.50 per employee
·
Such additional premium is to be calculated
and charged on the max licensed seating capacity of the vehicle.
·
The present circular is a fall out of Judgment
of Madras High Court in CMA No. 2166 of
2019 & CMP No. 8871 of 2019 (United India Insurance Co. Ltd., Vs
Ilakkiyamathi & others)
·
The Hon’ble Court observed that in cases of employees travelling
in the private vehicles of the employers, met with an accident and got injured
or faced untimely death, it becomes a nightmare for the claimants to recover
compensation from the employer. This leads to claimants to suffer endlessly
having lost their sole breadwinner or having suffered injuries.
·
While the coverage is already
available and Insurers liable (only when) such cover is taken and premium paid,
the Hon’ble Court directed the Authority, in exercise of the powers conferred
by Section 14(2) of Insurance Act 1938, that :
all General Insurers carrying on Motor Insurance should provide the cover
to the employees travelling in employer’s vehicle (including paid driver if
applicable) under IMT-29 of the Indian Motor Tariff, compulsorily as an inbuilt coverage while
issuing private car policy for such vehicles.
·
Following this such coverage
becomes available as in-built cover without any specific action on the act of
proposer and is now available free-of any premium in all policies be it
Package/Bundled, standalone TP ..
·
This circular directs that ‘no
additional premium’ in respect of this cover be charged until further directions.
That makes the
circular and coverage abundantly clear – yet some additional info. Sec 2 of AIMT deals with Private Car. The scope under this is Private Car Type Vehicles used for social, domestic and pleasure
purposes and also for professional
purposes (excluding the carriage of
goods other than samples) of the insured or used by the insured's
employees for such purposes but excluding use
for hire or reward, racing, pace
making, reliability trial, speed testing and use for any purpose in connection
with the Motor Trade.
Sec 7. :
EXTRA BENEFITS
Premium
for each of the following extra benefit opted for by the insureds is to be
shown separately in the premium computation table:
(i)
Legal liability to paid drivers /and/or cleaner employed in connection with the operation and/or
maintenance of motor vehicle under the Workmen’s Compensation Act, Fatal
Accidents Act and at Common Law
(ii)
Legal Liability to employees of the insured traveling in and / or driving the
employer's vehicle.
Liability
to employees of the insured traveling in or driving the employer's vehicle,
either excluding or including the paid
driver may be covered on payment of
Additional Premium @ Rs. 50 /- per employee,
the premium being chargeable on the total number of such employees carried
(including the paid driver, if applicable)
but not exceeding the maximum
licensed seating capacity of the vehicle. The Additional Premium of Rs.50/- per employee is net irrespective of
any period of insurance not exceeding 12 months.
Endorsement IMT-28 (for
paid driver and/or cleaner) or IMT-29 (employees other than paid driver and/or
cleaner) as applicable is to be
used.
Concluding with
the Tariff wording for the endorsement IMT 29 also. LEGAL
LIABILITY TO EMPLOYEES
OF THE INSURED
OTHER THAN PAID
DRIVER AND/OR CONDUCTOR AND/OR CLEANER WHO
MAY BE TRAVELLING
OR DRIVING IN THE
EMPLOYER’S CAR. {Private Cars
only/ Motorised two wheelers (not for hire or reward)}
In
consideration of the payment of an additional premium @ Rs.__/- per employee
insured notwithstanding anything to the contrary contained in the policy it is
hereby understood and agreed that the insurer will indemnify the insured
against the insured’s liability at Common Law and Statutory Liability under the
Fatal Accidents Act, 1855 for compensation (including legal costs of any
claimant) for death of or bodily injury to any
employee (other than paid drivers) of
the within named insured being carried in or upon or entering in or getting on
to or alighting from or driving the vehicle insured.
Provided
that in the event of an accident whilst the vehicle insured is carrying more
than .....* employees of the insured (including the driver) the insured shall
repay to the insurer a rateable
proportion of the total amount
payable by the insurer by the reason of this endorsement
in respect of accident in connection
with such vehicle insured.
Subject otherwise to the terms, conditions
limitations and exceptions of this Policy.
So in
comes IMT 29 compulsorily made available without payment of any premium – additional liability which MV Act provisions
did not mandate. What will be the view of Insurers ?
With regards
– S Sampathkumar
19/10/2023