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Thursday, August 3, 2017

MACT - Insurance liable even when Policy has expired, says Court

The roads are becoming more and more congested – there are so many vehicles of different hues and sadly accidents are on the rise.When there is a road accident – the injured or the legal heirs (if deceased) file petition before Motor Accidents Claims Tribunals (MACT) specially constituted,  claiming compensation against the vehicle owner impleading the Insurer also.  After due procedure, the Hon’ble Court passes award against the owner / Insurer and by virtue of Policy, Insurers effect payment of compensation. 

The Motor Vehicles Act and the setting up of MACT is considered beneficial legislation in nature – a legislation that has a broader view considering the welfare of people.  MACTs are set up for providing correct and speedy compensation to the victims of road accidents.    In 1939, Motor Vehicles Act, a statute consolidated the laws relating to motor vehicles. This has since been replaced by MV Act 1988. Chap IX of the Act deals with Insurance of Motor vehicles against Third party risks. Sec 146 specifies the necessity for insurance against TP risks but sub sec (2) exempts vehicles owned by Govt as also State transport undertaking. The requirements of policies and limits of liability are specified in Sec 147. Sec 149 deals with the Duty of the Insurers to satisfy judgments and awards against persons insured in respect of TP risks.

Like every other Policy of Insurance, a Motor Policy [i.e., policy covering a registered Motor vehicle] – is primarily, a contract between the Insurer and the Insured (proposer) – Insurer undertaking to indemnity the insured against loss or damage arising out of any insured peril during the currency of the policy.  Motor Policies are annual contracts (they can be short period also).  The policy incepts from 00:00 hours and expires on midnight of the last day of the policy. The policy ceases to be in force upon expiration and the policy holder will not be entitled to any benefits under the insurance policy thereafter. 

Now read this interesting news item from the New Indian Express, Chennai edition of date. 

CHENNAI: Holding that expiry of the validity of an insurance policy of a vehicle cannot be a ground to deny compensation to an accident victim, the Motor Vehicles Accident Claims Tribunal in Chennai has awarded a compensation of  Rs 39 lakh to the legal heirs of a 27 year-old techie, who died in an accident in 2012.

Accepting the arguments of advocate AS Bilal, the tribunal, which is also the 2nd Court of Small Causes, presided over by S Priya, awarded the compensation, while passing orders on a claim from the father, mother and sister of the deceased V Vasanthakumar, last week.

The Reliance General Insurance Company should pay Rs 38.79 lakh with nine per cent interest from April 2013, the date of filing of the claim, to the claimants within 30 days and it is entitled to recover the same from S Ramesh of Kandigai, the owner of the vehicle, which was involved in the accident, the Judge said.

According to Bilal, the deceased was a mechanical engineer working in a private soft-ware firm in SIPCOT at Oragadam.He was a bachelor drawing a salary of about Rs 30,000 at the time of the accident. While he was returning in the office car, a milk van owned by Ramesh rammed against the car killing him on the spot on the ECR near Aarambakkam on April 13, 2012. The driver escaped with injuries. Bilal demanded a reasonable compensation taking into consideration the age of the deceased and the future prospects, including promotions.

It is reported that policy had expired and was not in force on the date of accident.  In principle, in all such cases, Insurers should be exonerated with no liability on them.  The Policy like many other products has a shelf-life and no benefits would inure after the expiration of the policy.  The full details read from the order when available would throw some light on the reasoning of this order, which should shock the Insurance community at large.

With regards – S Sampathkumar

10th July 2017.

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