Supreme Court Directs IRDAI To Consider If Personal Accident Cover Can Include Persons Other Than Owner

“In these sort of matters, an appropriate consideration is required to be made by the Insurance Regulatory and Development Authority of India (for short ‘IRDAI’) to include such claims since at present, they are not considered as an occupant of the vehicle. Though, at this stage we do not express any opinion on the merits of the case, but prima facie we are of the view that such coverage should be considered firstly by the IRDAI by taking into consideration the existing tariff which is indicated to also include such cases for reimbursement.”

Before passing the said direction, the top court observed –

First, the accidents are said to have occurred while either a family member or a close friend was driving or riding the borrowed vehicle, and without the involvement of another ‘offending’ vehicle. As a result, “the insurance company, while declining to reimburse the compensation, sought to rely on the India Motor Tariff, more particularly, Section III relating to personal accident cover for owners-drivers.” According to this document, the owner-driver of a vehicle would be compensated for the bodily injury sustained by them, or if the accident results in their death, provided, inter alia, that the person driving the vehicle was its registered owner.

Second, while the Supreme Court has held that in such cases, the person driving or riding a borrowed vehicle ‘steps into the shoes’ of the owner and therefore, the Section III relating to personal cover for the owner-driver would apply. However, in the present cases, the claims were not strictly considered as falling under claims for compensation, the bench noted. This was because the accident was not caused due to the negligence of the person driving or riding the vehicle, but owing to other causes. “In one of the cases, a Nilgai from the wild crossed the road and the accident had occurred,” the bench illustrated.

Directing the regulatory authority to consider whether such claims could be included within personal accident cover, the bench ordered, “We request Mr Abhishek Gola, counsel appearing for the insurance company as well as for the IRDAI to bring these aspects to the notice of the concerned authorities to take a decision in the matters and inform this Court.”

Case Title

1. Sujata Singh & Anr. v. Divisional Manager National Insurance Company Limited & Anr. | Civil Appeal Nos. 7198-7199 of 2022

2. G. Santhi & Ors. v. The Oriental Insurance Company Limited & Anr. | Civil Appeal Nos. 7965 of 2022

Click Here To Read/Download Order