(..19..)
INSURANCE OF MOTOR VEHICLES AGAINST THIRD-PARTY RISKS
(SS. 145 TO 164)
QUESTION BANK
Q.1. Discuss briefly the provisions relating to the insurance of motor vehicles.
Q.2. Discuss provisions relating to the requirement of insurance policy and limits of liability.
Q.3. Discuss provisions relating to ‘hit and run’ accident cases.
SHORT NOTES
- Hit and run cases.
SYNOPSIS
- INSURANCE OF MOTOR VEHICLE IS COMPULSORY (S. 146)-
Meaning of ‘third party’-
- REQUIREMENTS OF POLICY AND LIMITS OF LIABILITY (S. 147)-
- DUTY OF INSURER TO SATISFY JUDGMENT AND AWARD (S. 149)-
- SPECIAL PROVISION FOR COMPENSATION IN CASE OF HIT AND RUN
MOTOR ACCIDENT (S. 161)-
Scheme for payment of compensation in cases of hit and run motor accident (S. 163)-
- SPECIAL PROVISIONS AS TO PAYMENT OF COMPENSATION ON STRUCTURED FORMULA BASIS (S. 163 A)-
1. INSURANCE OF MOTOR VEHICLE IS COMPULSORY[1] (S. 146)-
Motor Vehicle Act makes the insurance of motor vehicles compulsory. S. 146 provides that the owner of every motor vehicle is bound to insure his vehicle against third-party risk. It further provides that 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 the vehicle is insured.
However, a driver merely as a paid employee who does not know the absence of policy is not said to have acted in contravention of the provisions of this Act.
Similarly, the appropriate Government may, by order, exempt from the operation of third-party insurance to any vehicle owned by any of the following authorities viz-
(i) the Central Government or Government’s vehicle, used for Government purposes connected with any commercial enterprise.
(ii) any local authority.
(iii) any State Transport undertaking (within the meaning of S. 68 of the Act).
Provided that no such orders shall be made in relation to any such authority unless a fund has been established and is maintained by that authority in accordance with the rules made on that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties.
The object of the provision is to protect the third party’s interest.
The meaning of ‘third party[2]’-
An insurer is treated as the first party, and the policyholder is treated as the second party to the insurance contract. Other parties than the above two, to which damage, injury, or death is caused, are called ‘third party’. The government is the third party according to the Act.
2. REQUIREMENTS OF POLICY AND LIMITS OF LIABILITY[3] (S. 147)-
The first part of S. 147 lays down the requirements of insurance policies, viz-
(i) policy must be insured by a person who is an authorized insurer, and
(ii) person or classes of persons mentioned in the policy must be insured against any liability which he may incur in respect of the death or bodily injury to any person, including the 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, and
(iii) person or class of persons mentioned in the policy against the 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.
(iv) Policy shall not be required to cover liability in respect of death or injury to any employee of insured arising out of and in the course of his employment; such employees are-
(a) for death or personal injury to a third party, the whole amount of liability incurred.
(b) for damage to the property of a third party, the liability is limited to Rs. 6000 (six thousand).
Thus, there is no limit on liability for death and personal injury to a third person, but so far as property damage is concerned, the liability is limited to Rs. 6000.
3. DUTY OF INSURER TO SATISFY JUDGMENT AND AWARD (S. 149)-
An insurer must satisfy any judgment or award passed against the person covered by the policy. An insurer is liable to pay the amount, cost, and interest if awarded on the principal amount.
However, it is essential to make the insurer party to the claim, and the opportunity to defend is to be given to it. The insurer can defend the claim for breach of policy on any of the following grounds-
(a) If the vehicle is used for hire or reward, which is not covered in a contract of insurance.
(b) if a vehicle is used for organized racing and speed testing, which is not covered in a contract of insurance.
(c) if a vehicle is used for a purpose not allowed by the permit if a vehicle is a transport vehicle.
(d) if a vehicle is used without a sidecar being attached where the vehicle is a motorcycle; or
(e) if the driver had no valid license at the time of the accident.
(f) if the injury is caused or contributed due to war, riot, or civil commotion,
(g) if a policy was obtained by non-disclosure of a material fact or by false representation of fact.
4. SPECIAL PROVISION FOR COMPENSATION IN CASE OF HIT-AND-RUN MOTOR ACCIDENT[4] (S. 161)-
“Hit and run accident” means “an accident arising out of the use of a motor vehicle or motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts of the purpose” (S. 161 (b)).
There is a special provision for compensation in such hit-and-run cases. The section provides that the general Insurance Corporation and the insurance companies, for the time being, carrying on general insurance business in India shall provide for compensation in respect of the death of or grievous hurt to persons resulting from hit-and-run motor accidents.
The compensation to be paid in such hit-and-run cases shall be
(i) With respect to the death of any person, a fixed sum of Rs. 25000/- (Twenty-five thousand only).
(ii) in respect t of the grievous hurt to any person, a fixed sum of Rs. 12,500/- (Twelve thousand five hundred only).
However, if a person receives compensation or other amounts subsequent to receiving the above-mentioned amount under other provisions of this Act or under provisions of any other law, the amount received under this section shall be returned back to the payee-insurer (S. 162).
Scheme for payment of compensation in cases of hit and run motor accident (S. 163)-
The section empowers Central Government by notification in the official Gazette to make a scheme specifying the manner in which the scheme shall be administered by the General Insurance Corporation, the form, manner and time within which application for compensation may be made, the officers or authorities to whom such application may be made, and the procedure to be followed by such officers or authorities for considering and passing orders on such applications and all other matters connected with, or incidental to the administration of the scheme and the payment of compensation.
5. SPECIAL PROVISIONS AS TO PAYMENT OF COMPENSATION ON STRUCTURED FORMULA BASIS[5] (S. 163 A)-
The section was inserted in 1994 by the amendment to the Act. The section awards compensation on a ‘no fault liability basis’ as an alternative to a claim under S. 140.
- 163 (A) (1) provides that ‘Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorized insurer shall be liable to disablement due to accident arising out of the use of motor vehicle, compensation as indicated in the second schedule to the legal heirs or the victim as the case may be.
It further lays down in clause (2) that in any claim of compensation mentioned above, the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or the vehicles concerned or of any other person.
Clause (3) states that the Central Government may amend the second schedule from time to time, by notification in the official Gazette, keeping in view the cost of living.
Where a person is entitled to claim compensation under S. 140 and S. 163 A, he shall file the claim under either of the said sections and not under both (S. 163 B).
SECOND SCHEDULE FOR COMPENSATION FOR THIRD-PARTY FATAL ACCIDENT/INJURY CASE CLAIMS-
1.. Amount of compensation shall not be less than Rs. 50,000.
2. General Damage (in case of death):
The following General Damages shall be payable in addition to the compensation outlined above: (i) Funeral expenses -Rs. 2,000
(ii) Loss of Consortium if a beneficiary is a spouse -Rs. 5,000
(iii) Loss of Estate -Rs. 2,500
(iv) Medical expenses incurred before death are supported by bills/vouchers but do not exceed Rs. 15,000
3. General Damages in Case of Injuries and Disabilities:
(i) Pain and Sufferings-
(a) Grievous injuries -Rs. 5,000
(b) Non-grievous injuries -Rs. 1,000
(ii)Medical Expenses-actual expenses incurred supported by bills/vouchers but not exceeding onetime payment -Rs. 15,000
4. Disability in non-fatal accidents:
The following compensation shall be payable in case of disability to the victim arising from non-fatal accidents: –
Loss of income, if any, for the actual period of disablement not exceeding fifty-two weeks plus either of the following:-
(a) In case of permanent total disablement, the amount payable shall be arrived at by multiplying the annual loss of income by the Multiplier applicable to the age on the date of determining the compensation or
(b) In case of permanent partial disablement, such a percentage of the compensation would have been payable in the case of permanent total disablement as under item (a) above. Injuries deemed to result in Permanent Total Disablement/Permanent Partial Disablement and percentage of loss of earning capacity shall be as per Schedule I under
5. Notional income for compensation to those who had no income prior to the accident:-
Fatal and disability in non-fatal accidents:- (a) Non-earning persons -Rs. 15,000 permanent year (b) Spouse -Rs. l/3rd of the income of the earning/surviving spouse. In the case of other injuries, only “General Damage” is applicable. (See the second schedule on the next pages).
*****
[1] वाहणाचा विमा हा सक्तीचा आहे.[ वाहन बीमा अनिवार्य है। ]
[2] त्रयस्थ इसम [तृतीयक इसम]
[3] विम्यासाठी जरूरी घटक व जबाबदारीची मर्यादा [ बीमा की अनिवार्यता और दायित्व की सीमा]
[4] अपघात करून वाहण पळूण गेल्यास नुकसाण भरपाईची तरतूद [ दुर्घटना के कारण वाहन के नुकसान की स्थिति में मुआवजे का प्रावधान]
[5] साचेब्ध पध्दतीने नुकसान भरपाई देण्याची विशेष तरतूद [ स्टाम्प शुल्क के माध्यम से हर्जाने के भुगतान की विशेष व्यवस्था ]