Third Party Motor Insurance Claims: Why Courts Are Tightening Insurer Defences

Recent rulings reveal a consistent judicial message. Third party motor insurance is not an ordinary commercial contract. It is a statutory instrument meant to protect innocent victims of road accidents. Insurer defences are therefore being scrutinised more strictly than ever before.

The Statutory Purpose Behind Third Party Insurance

Third party motor insurance flows from the compulsory insurance framework under the Motor Vehicles Act. The legislative intent is clear. Victims of road accidents should not be left remediless merely because of disputes between the insured and the insurer.

Courts have repeatedly emphasised that third party insurance is welfare oriented in nature. Unlike own damage claims, third party claims are designed to secure compensation for individuals who have no contractual relationship with the insurer. This foundational principle increasingly guides adjudication before MACTs and appellate courts.

Changing Judicial Approach at MACT Level

At the tribunal level, there is a visible shift away from mechanical acceptance of insurer objections. Claims that once resulted in reduced awards or outright rejection are now being examined through a victim centric lens.

MACTs are insisting that insurers discharge a higher burden of proof when invoking defences such as breach of policy conditions, unauthorised use of vehicle or licence related objections. Mere pleadings or production of policy documents are no longer sufficient. Tribunals are demanding clear evidence of wilful and fundamental breach.

Narrowing the Scope of Policy Exclusions

One of the most notable trends is the narrowing interpretation of policy exclusions. Courts are increasingly holding that exclusions must be construed strictly and narrowly, especially where third party rights are involved.

Defences based on route permit violations, vehicle category mismatches or technical irregularities are being rejected unless the insurer demonstrates a direct causal link between the alleged breach and the accident. The emphasis is on substance rather than form.

Pay and Recover as the Judicial Middle Path

Even where a breach is established, courts are frequently invoking the pay and recover principle. This approach ensures that victims receive timely compensation while preserving the insurer's right to recover the amount from the vehicle owner later.

The pay and recover doctrine reflect judicial pragmatism. It recognises that third party claimants should not be forced into prolonged litigation over inter se disputes between insurers and insured persons.

Higher Courts Reinforcing Victim Protection

Appellate courts, including the Supreme Court of India and various High Courts, have reinforced these principles in recent years. Judgments have consistently underscored that insurer defences must not defeat the social objective of the statute.

The courts have clarified that technical breaches which do not contribute to the occurrence of the accident cannot be grounds to avoid liability towards third parties. This jurisprudence has brought much needed predictability and fairness into motor accident compensation law.

Practical Impact on Insurers and Claimants

The tightening of insurer defences has tangible consequences for all stakeholders.

For claimants, it translates into faster relief and reduced litigation fatigue. For insurers, it necessitates more careful underwriting, stronger compliance monitoring and a shift away from routine litigation strategies.

Key takeaways from recent trends include

• Higher evidentiary burden on insurers to prove fundamental breach
• Strict interpretation of policy exclusions in third party claims
• Increasing reliance on pay and recover orders
• Greater focus on statutory purpose over contractual technicalities

The Road Ahead

The current judicial trajectory suggests that third party motor insurance will continue to be treated as a social security mechanism rather than a purely contractual arrangement. Insurer defences are not disappearing, but they are being disciplined by principles of proportionality, fairness and legislative intent.

As road accidents continue to impose heavy social and economic costs, courts appear determined to ensure that compensation law remains humane, accessible and effective. For insurers and practitioners alike, the message is clear. In third party motor insurance claims, welfare now decisively outweighs formality.

Author: Adv. Varun Singh, Founder, Foresight Law Offices India. Views are personal.