By- JYOTSNA SINGH
Insurance is a contract in which insurer assumes that risk of any loss the owner of a motor vehicle may incur through damage to property or to persons as result of accident. Third-Party Insurance is a statutory requirement under the section 146 of Motor Vehicles Act, 1988 where third-party is defined as everyone, other than the two parties in the contract, in section 145 of Motor Vehicle Act, 1988. Vehicles cannot be used in public without a third-party insurance. The beneficiary in this insurance is a third party instead of the two parties in the contract which are the insurer company and the insured. It does not provide benefit for the insured but it covers the insured person’s legal liability for the death or disability of the third party and damages to the third party’s property.
The third-party’s definition is not limited and it can be anyone who is injured by the insured. The premiums of this policy are calculated by the Tariff Advisory Committee. The third-party claims come under the No Fault Liability. In this insurance the liability of insured has to be proven to claim damages from him. This insurance involves lawyer’s aid. All rights of third party are covered under the Motor Vehicle Act (1988). Other than Motor Vehicle Act (1988), the Insurance Act (1938) have few sections that mandates the insurer about the insurance because of risks in third party motor vehicles.
RIGHTS OF THIRD-PARTY
- RIGHT TO GET INFORMATION
The person against whom a claim is made regarding liabilities incurred to anyone shall not refuse to give information about whether he is insured or was insured or insurance policy was cancelled some time ago to the person who is claiming. The third party can also get the information about any rights of him under 150 are directly or indirectly affected by any contract of insurance.
- RIGHT TO REMAIN UNAFFECTED
The rights of claimant remain unaffected even when there is a judgment or award against insured person, when liability of insurer is unlawfully restricted and when there is settlement between insurer and insured person. This right is not absolute, as it cannot be exercised until insured person was not notified by court regarding proceeding.
- TRANSFER OF RIGHTS OF INSURE (AGAINST INSURER) TO THE THIRD PARTY
In cases of insolvency of insured person, his rights against the insurer get transferred to the third party, so upon the transfer of rights, the liability of insurer to insured will be the same with the third party.
- LIABILITY OF INSURER TOWARDS THIRD PARTY
According to the section 147(2) of Motor Vehicle Act, 1988 the policies shall cover any liability in respect of any accident up to limit of amount of liability. The liability of insurer is statutory, hence the liability of insurer to satisfy the decree passes in favour of third party is also statutory.
- HIT AND RUN MOTOR ACCIDENT
The insurer as long as it is running as a business shall compensate for death or grievous hurt resulting from hit and run motor accidents. For death, fixed amount of twenty-five thousand rupees and for grievous hurt, fixed amount of twelve thousand and five-hundred rupees. But if this amount is already paid through another provision of act then it will be refunded to insurer.
- There is no need for claimant to prove death or grievous hurt that results in permanent disablement due to accident. His entitled for the compensation.
COMPENSATION CLAIMS UNDER MOTOR VEHICLE INSURANCE
The Motor Vehicles Act (MV), 1988 makes it mandatory for the payment of compensation to the victims of accidents caused due to motor vehicle. The Act further states that no one shall use motor vehicle in public place without an insurance policy. A claim for compensation may be made to a claim adjudicating body having authority over the area in which the accident took place or to the Motor Accident Claim Tribunals within whose administration the claimant lives, at the option of the claimant. An application for insurance must be made within ideally 6 months of the date of the incident.
The insurance policy shall comply with the given requirements in MV Act. He cover of vehicle and physical damages is optional but the cover of injury or death is mandatory. The compensation that has to be paid is determined by the Motor Accident Claim Tribunals (MACT) established under MV Act. The motor policies were governed by the tariff stated by Tariff Advisory Committee. Sections 140, 142, 143 and 144 state about the interim compensation on No Fault basis. According to this, Rs. 50,000/- is to provided to family members of deceased and Rs. 25,000/- to the grievously injured person.
The compensation under Article 140 is only available if prima facie evidence of following is available:
- Accident by the offending vehicle
- Offending vehicle being insured
- Death or grievous hurt have been caused
Further, section 145 to 164 state that is compulsory for every vehicle owner to have a third-party insurance. According to Article 146(1), no person shall use a motor vehicle in public place without a third-party insurance policy which comply with the requirements of such insurance. Section 147 talks about the requirements of policy and limits of it. Hence it says that every owner must some policy to cover liability that may arise in an accident like damage to property or human injury or death. Insurers are allowed few defences too when: use of vehicles for hire and no permit is there; vehicle is used for racing or speed testing; no driving license with the driver; or the policy taken is void. The burden of proving these defences’ availability lies on company. Although these defences exist, they cannot absolve insurer liability. Without the knowledge of the owner the breach of conditions like not holding driving license cannot be absolved.
Hence in progression it can be seen that, the rights for third party and compensation claim principles have been formulated in the Motor Vehicle Act, 1988.