Insurance Of Motor Vehicles Against Third Party Risks

CHAPTER XI OF MOTOR VEHICLES (AMENDMENT) ACT, 2019 DEALS WITH INSURANCE OF MOTOR VEHICLES AGAINST THIRD PARTY RISKS

SECTION 145 :- DEFINATION

AUTHORISED INSURER :- means an insurer for the time being carrying on general insurance business in India and granted a certificate of registration by the INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA established under SECTION 3 of the INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY ACT, 1999. 

and any Government insurance fund authorised to do general insurance business under the GENERAL INSURANCE BUSINESS (NATIONALISATION) ACT, 1972;

CERTIFICATE OF INSURANCE :- means a certificate issued by an authorised insurer in pursuance of SECTION 147 and includes a cover note complying with such requirements , where more than one certificate has been issued in connection with a policy, all those certificates.

GRIEVOUS HURT :- as defined in SECTION 320 OF IPC "includes Emasculation, Permanent privation of the sight , hearing , any member or joint , permanent impairing of powers of any member / joint , Permanent disfiguration of the head / face , Fracture or dislocation of bone/ tooth and Any hurt which endangers life or which causes the sufferer to be during the space of TWENTY DAYS in severe bodily pain, or unable to follow his ordinary pursuits"

HIT AND RUN MOTOR 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 for the purpose.

POLICY OF INSURANCE :- includes certificate of insurance.

PROPERTY :- includes roads, bridges, culverts, causeways, trees, posts, milestones and baggage of passengers and goods carried in any motor vehicle.

THIRD PARTY :- includes the Government, the driver and any other co-worker on a transport vehicle.

SECTION 146 :- NECESSITY FOR INSURANCE AGAINST THIRD PARTY RISKS.

  • No person shall use ( except as a passenger) or allow any other person to use a motor vehicle in a public place, unless there is in force a policy of insurance with respect to that motor vehicle as per requirements of this Chapter.

PROVIDED - in the case of a vehicle carrying or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the PUBLIC LIABILITY INSURANCE ACT, 1991.

Where a person is driving a motor vehicle merely as a paid employee and there no policy for that motor vehicle , he shall not be deemed to act in contravention of this section unless he knows/ has reason to believe that there is no such policy in force.

  • Above provisions SHALL NOT apply to any vehicle owned by the Central Government or a State Government and used for purposes not connected with any commercial enterprise.
  • Appropriate Government MAY EXEMPT any vehicle from these provisions if vehicle is owned by - Central Government , State Government, any local authority or any State Transport Undertaking.

However , no such order shall be made unless a fund has been established by such authority as prescribed by appropriate Government.

APPROPRIATE GOVERNMENT :- in relation to corporation / company owned by Central Government or any State Government, means the Central Government or that State Government; in relation to any corporation or company owned by the Central Government and one or more State Governments, means the Central Government; in relation to any other State Transport Undertaking or any local authority, means that Government which has control over that undertaking or authority.

SECTION 147 :- REQUIREMENT OF POLICIES AND LIMITS OF LIABILITY

  • A policy which must be -

(a) issued by a person who is an authorised insurer and

(b) insures the person specified in the policy -

  • against any liability incurred by him in respect of death/bodily injury to any person or damage to property of a third party by use of the motor vehicle in a public place.
  • against death / bodily injury to any passenger of a transport vehicle except gratuitous passengers of a goods vehicle.

--> for purposes of third party insurance related to death / grievous hurt to a person, the Central Government shall prescribe a base premium and liability of an insurer in relation to such premium of insurance policy.

--> policy shall have no effect unless a certificate of insurance is issued by insurer in prescribed form.

--> Insurance policy issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing terms.

--> Insurance shall be liable to indemnify person specified in policy in respect of any liability which policy purports to cover.

SECTION 149 :- SETTLEMENT BY INSURANCE COMPANY AND PROCEDURE THEREFOR

--> On receiving information of accident, The Insurance company shall designate an officer to settle the claims relating to such accident.

--> Designated Officer may make an offer to the claimant for settlement before the Claims Tribunal.

If, claimant

  1. accepts the offer,—
    1. Tribunal shall record settlement and claim shall be deemed to be settled by consent
    2. payment shall be made by the insurance company within a maximum period of thirty days. 
  2. rejects such offer - a date of hearing shall be fixed by the Claims Tribunal .

SECTION 150 :- DUTY OF INSURERS TO SATISFY JUDGMENTS AND AWARDS AGAINST PERSONS INSURED IN RESPECT OF THIRD PARTY RISKS.

--> If certificate of insurance has been issued and a judgment/award is obtained against any person insured by the policy, insurer shall pay to the person entitled to the benefit any sum not exceeding summ assured + cost + interest , notwithstanding that the insurer may be entitled to avoid/cancel the policy.

--> No sum shall be payable by an insurer unless the insurer had notice of the proceedings in which judgment / award is given Insurer shall be entitled to defend action on following grounds - 

  • THERE WAS BREACH OF A SPECIFIED CONDITION OF THE POLICY.
  1. a condition excluding driving by any person not duly licensed / disqualified to obtain or hold driving license or driving under influence of alcohol or drugs.
  2. a condition excluding liability for injury caused by conditions of war, civil war, riot.
  • THAT POLICY IS VOID ON GROUND THAT IT WAS OBTAINED BY NON-DISCLOSURE OF ANY MATERIAL FACT.
  • THAT THERE IS NON-RECEIPT OF PREMIUM.

--> No insurer , to whom notice has been given , shall be entitled to avoid his liability to any person entitled to the benefit of such judgment.

--> If on date of filing claim, claimant is not aware of insurance company with which vehicle is insured, it shall be duty of owner of vehicle to furnish the details to the tribunal.

SECTION 151 :- RIGHTS OF THIRD PARTY AGAINST INSURERS ON INSOLVENCY OF INSURED

--> If the person is insured against liabilities which he may incure against third party becomes insolvent either before / afer the event , then right of insured person against insurer shall be transferred to third part .

 --> Any condition in policy to alter these rights shall be of no effect.

--> Upon transfer, insurer shall be under the same liability to the third party as he would have been to the insured person.

SECTION 152 :- DUTY TO GIVE INFORMATION AS TO INSURANCE

--> No person against whom a claim is made shalll refuse to state whether he was insured by a policy or not; nor shall he refuse to give such particulars as required with respect to such policy .

--> In event of any person becoming insolvent,it shall be duty of insolvent debtor to give ,on any person's request , such information as may reasonably be required for ascertaining right conferred under SECTION 151.

--> Duty shall include a duty to allow all contracts of insurance, receipts for premiums, and other relevant documents in the possession or power of the person on whom the duty is so imposed to be inspected and copies to be taken.

SECTION 153 :- SETTLEMENT BETWEEN INSURERS AND INSURED PERSONS

--> No settlement made by an insurer in respect of any claim which might be made by a third party shall be valid unless such third party is a party to the settlement

--> The Claims Tribunal shall ensure that the settlement is bonafide , not made under undue influence and the compensation is made as per SECTION 164(1).

--> Where insured person becomes insolvent, no agreement between him and the insurer be valid in order to defeat the right of third party.

SECTION 155 :- EFFECT OF DEATH ON CERTAIN CAUSES OF ACTION

--> The death of a person in whose favour certificate of insurance had been issued, if it occurs after the happening of an event given rise to a claim under this Chapter, shall not be a bar to survival of any cause of action against his estate or against the insurer.

SECTION 157 :- TRANSFER OF CERTIFICATE OF INSURANCE

--> Where person in whose favour certificate of insurance is issued transfers to another person ownership of the motor vehicle together with the policy,the certificate of insurance and the policy shall be deemed to have been transferred in favour of that person. it includes transfer of rights and liabilities.

--> Transferee shall within fourteen days apply to insurer for making necessary changes in the certificate.

SECTION 158 :- PRODUCTION OF CERTAIN CERTIFICATES, LICENCE AND PERMIT

--> Any person driving a motor vehicle in public place shall, on being so required by a police officer in uniform authorised in this behalf by the State Government, produce -

  1. Certificate of insurance;
  2. the certificate of registration;
  3. the pollution under control certificate;
  4. the driving licence;
  5. in transport vehicle, certificate of fitness permit
  6. any certificate of exemption

--> No person shall be liable to conviction by reason of the failure to produce above documents if within 7 days from date on which its production was required / date of accident ,he produces certificate at police station.

SECTION 159 :- INFORMATION TO BE GIVEN REGARDING ACCIDENT

The police officer shall prepare an accident information report to facilitate settlement of claim within three months and submit it to Claims Tribunal.

SECTION 161 :- SPECIAL PROVISIONS AS TO COMPENSATION IN CASE OF HIT AND RUN MOTOR ACCIDENT

DEATH in hit and run motor accident = a fixed sum of two lakh rupees or such Higher amount as may be prescribed by the Central Government

GRIEVOUS HURT = fixed sum of fifty thousand rupees or such higher amount as may be prescribed by the Central Government.

Central Government may a scheme specifying forum, manner and time within which applications for compensation may be made, officers to whom such applications may be made, the procedure to be followed .

SCHEME MAY PROVIDE THAT :-

  • fixed sum as interim relief.

in contravention of any provision imprisonment upto TWO YEARS/FINE not less than TWENTY-FIVE THOUSAND RUPEES extended upto FIVE LAKH RUPEES or with BOTH;

SECTION 163 :- REFUND IN CERTAIN CASES OF COMPENSATION PAID UNDER SECTION 161 ( HIT & RUN )

--> Payment of compensation under SECTION 161 shall be subject to the condition that if any compensation in lieu of or by way of satisfaction of claim for compensation is awarded.

--> under any other provision of this Act or any other law for the time being in force or otherwise, so much of the other compensation or other amount aforesaid as is equal to the compensation paid under SECTION 161, shall be refunded to the insurer.

SECTION 164 :- PAYMENT OF COMPENSATION IN CASE OF DEATH OR GREVIOUS HURT, ETC. ( NO FAULT LIABILITY )

DEATH = sum of five lakh rupees

GREVIOUS HURT = sum of sum of five lakh rupees

( without requirement to prove default/ neglect of owner of motor vehicles)

SECTION 164A :- SCHEME FOR INTERIM RELIEF FOR CLAIMANTS

The Central Government may make schemes for the provision of interim relief to claimants.

SECTION 164B :- MOTOR VEHICLE ACCIDENT FUND.

  • Central Government shall constitute this Fund.
  • Fund shall be constituted for the purpose of providing compulsory, insurance cover to all road users in the territory of India.
  • Fund shall be utilised for following :-
  1. Treatment of persons injured in road accidents.
  2. bcompensation to representatives of a person who died in hit and run motor accident.
  3. compensation to a person grievously hurt in a hit and run motor accident.
  4. Compensation to such persons as prescribed by the Central government.

Central Government maintain proper accounts, records of the fund. account shall be audited by Comptroller and Auditor-General of India. Maximum liability amount shall be paid as prescribed by central government.

SECTION 164C :- POWER OF CENTRAL GOVERNMENT TO MAKE RULES

Central Government may make rules for the purposes of carrying into effect, the provisions of this Chapter.

  1. form and particulars of insurance policy.
  2. form in which the accident information report is to be prepared.
  3. form of annual statement of accounts.
  4. issue of duplicates to replace certificates of insurance lost, destroyed.
  5. administration of the Fund.
  6. minimum premium,maximum liability
  7. time limit and fee for furnishing information under SECTION 160
  8. sum to be paid as interim relief
  9. procedure for payment of compensation.
  10. any other matter as may be prescribed.