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Thursday, October 1, 2020

Pollution - Vehicles on Road - PUC - Mandatory declaration while taking Insurance !!


Dear (s) 

As you drive on road, sometimes vehicles whizz past leaving a trail of black thick smoke and others blame the vehicle for polluting the road.  Pollution is everyone’s concern.  One of the impact of Covid imposed lockdown was – lesser no. of vehicles on road, and hence lesser emission of CO2 and other chemicals – people in cities too were breathing easy and good air at that. 

In the Insuring Sector, there is some buzz as Insurers from 15.9.2020 have started insisting on a declaration that the vehicle carries valid PUC ! [Pollution under Control Certificate]- or else there would be no insurance coverage.   All  Motor Proposal forms and Cover notes and all digital formats of all Insurers contain the PUC declaration now.    Like the license agreements on Computers, which will not allow us to proceed without marking Agree / yes to the said terms – proposer will have to say yes, lest it will not proceed further.

This mandatory declaration of having valid PUC would become applicable for  renewals / roll overs, applicable for all classes of vehicles including Two wheelers. Interestingly this would be applicable for Third Party policies as well.  Given our tendency to say yes for proceeding, what will happen,   if someone misdeclares Yes (when PUC is not available) is not answered now.

These instructions refer back to  IRDA Circular No IRDA/NL/MISC/104/07/2018  (yes 2018) regarding mandatory capturing of the PUC (Pollution Under Control) declaration in Motor Proposals.  The IRDA circular of July 2018  takes reference to Supreme Court order of 10.8.2017 Writ petition 13029/1985 in MC Mehta Vs Union of India wherein the Hon’ble court directed the Insurers not to insure vehicle unless it has a valid PUC certificate on the renewal of Insurance Policy.  IRDA had directed compliance of the instructions.

Now here is something on why it was necessitated :   With the impending danger of global warming and to effectively reduce the amount of pollution in the air, the Government of India  mandated that every vehicle - commercial and private - has a pollution under control (PUC) certificate. The pollution under control (PUC) certificate is one which shows whether the vehicle is under the prescribed standards with regard to emissions. Apart from this, the PUC certificate has been made mandatory as per the Central Motor Vehicle Rule, 1989. Only if the emissions from the vehicle are below the prescribed norms which are deemed as legal, will the vehicle owner be allowed to use the vehicle on the roads of India. The emission test which checks the carbon monoxide and hydrocarbon levels of the emitted fumes can be carried out at any petrol bunk that is certified to carry out the test.

A PUC certificate will contain the following information:
        The certificate’s serial number
        The registration number of the vehicle
        The date of PUC testing
        The PUC certificates date of expiry
        The PUC readings from the test 

As per the Motor Vehicle Act, like a motor insurance policy, registration certificate, and driving license, a PUC certificate is now mandatory to carry while driving.

With the rapid increase in the number of vehicles, the problem of automobile pollution has assumed greater significance. Since the emission of smoke from motor vehicles is a major source of air pollution, specific standards for the permissible limits for such emission have been prescribed in the Motor Vehicles Act 1988 and Central Motor Vehicles Rules 1989. All vehicles which are in operation for more than a year should undergo emission tests every six months.

The Government has authorized 248 Private Emission Testing Centers throughout Tamil Nadu as per rule 116(B) of Tamil Nadu Motor Vehicles Rules 1989 and has made it mandatory that at the time of every transaction with Regional Transport Offices, certificate of Pollution Under Control will be checked.

Having a PUC Certificate is required by the Government of India by the Motor Vehicle Act of 1988. If your vehicle does not have a valid certificate, you will be liable for a Rs 1000 fine (and it’s Rs. 2000 for every subsequent offense!)

Moving away in social media (including many  WA groups) there was some panic based on a viral claim that if PUC is not valid, Insurers will not settle OD claim in the Policy.    While IRDA in their 2018 categorically directed Insurance Companies to comply with the direction of Honble Supreme Court – it also clarified on 26.8.2020 by a statement in their Web that  - the reports in media was misleading and clarified that   not holding a valid PUC certificate is not a valid reason for denying any claim under a motor insurance policy.

Hope my understanding is right and is of some help to Underwriters in getting clarity on the circular and on what they need to do on this.

In case someone is interested in reading further – here is a gist of Supreme Court order of 10.8.2017.. .. .. This was a writ petition filed by MC Mehta against Union of India and was represented by high profile counsel Harish N Salve for the petitioner among others.  In their affidavit the Ministry brought out a chart of the recommendations which included exploring the Petrol stations on how they are equipped to explore the PUC and furnish certificate after servicing a vehicle. Honble Court further directed ensuring linkage of renewal of insurance with availability of PUC.  The instruction that Insurers should not provide insurance coverage to a vehicle  unless it has a   valid PUC certificate.  Ministry of Road Transport expressed the view that linkage of PUC centres with VAHAN database and other enforcement measures, compliance of PUC by motor vehicle owners will improve considerably. (Only insurance related portion reproduced)

With regards – S. Sampathkumar





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