CHAPTER 1
INTRODUCTION
TO
MOTOR INSURANCE
APPLICATION OF BASIC PRINCIPLES
OF INSURANCE
Q. Discuss the application of principle of insurable interest under Motor Insurance.
Ans. The competency of a person to effect a contract of insurance is, inter alia, determined by his legal pecuniary relationship to the subject matter. This legal pecuniary relationship is known as insurable interest. Insurable interest gives a person legal right to insure the subject matter.
There are following three essentials of insurable interest : i) the existence of property exposed to loss, damage or a potential liability;
ii) such property or liability must be the subject matter of insurance;
ii) The insured must bear a legal pecuniary relationship to the subject matter so that he would benefit by its safety or would suffer financial loss in the form of physical damage or creation of liability because of its loss or damage.
Following paragraphs show how the principle of insurable interest is applicable in motor insurance:
1.Owner’s Insurable Interest in Vehicle - The motor vehicle which is the subject matter of motor insurance is exposed to loss by theft or damage due to an accident. Such loss or damage would cause financial loss to the insured. This entitles the owner to insure his vehicle against loss or damage.
2. Owner’s Insurable Interest in Legal Liability - Under Motor Vehicle Act in the case of an accident due to negligent use of the vehicle the insured has a legal liability towards third parties. He may suffer financial loss if he incurs such liability.
This entitles the owner to insure his vehicle against third party risk.
Even if the vehicle is not driven by the insured and If the accident is caused due to negligence of the driver he is legally liable to third party for his negligent act. So the question arises how the insured has insurable interest in the liability of the driver. Although owner insured has, strictly speaking, no insurable interest in any such liability, he is deemed as having acted as an agent in arranging the indemnity on behalf of other persons who may drive the vehicle and incur liability. Otherwise, the injured third parties will have no recourse to recover damages. This entitles the owner to insure his vehicle against third party risk.
3. Owner’s Insurable Interest offered by M.V. Act - Moreover under the requirement of Section 146 of the Motor Vehicles Act 1988 no person shall allow any other person to use a vehicle in a public place unless the vehicle is covered by an insurance policy complying with the requirements of the Act. This entitles the owner to insure his vehicle against third party risk.
4. Financer’s Insurable Interest - If a vehicle is purchased under a hire purchase agreement, the finance Company has an insurable interest in the vehicle until all the instalments are repaid. This entitles the finance Company to insure such vehicle under motor policy.
6. Garage Owners’ Insurable Interest Garage Owners act as bailee for customers’ vehicle. So they have insurable interest in respect of loss or damage to customers’ vehicle which are in their custody.
Q. Motor Insurance is a contract of Indemnity. Discuss Ans. The principle of indemnity requires that when a loss arises under an insurance policy, the loss must be made good in such a manner that financially the insured is neither better off nor worse off as the result of the loss. The object of this principle is to place the insured after a loss in the same
(3)
pecuniary position as far as possible as he occupied immediately before the loss. The effect of this principle is to prevent the insured from making a profit out of a loss. Motor Insurance contracts are contracts of indemnity. The principle is applied to this insurance as under:
Total Loss - In total loss of the vehicle, insurers pay the market value of the vehicle at the time of loss or the sum insured whichever is less.
Partial Loss - In partial loss to the vehicle, the cost of repairs is paid, but if old parts are replaced by new, a suitable depreciation is charged on the cost of new parts. However in case of motor cycles and private cars no such depreciation is applied. Insurers also reserve the option to repair or replace the vehicle or pay in cash.
Third Party Liability – Policy indemnifies the actual damages awarded subject to the limits of liability, if any, specified in the policy. Policy also indemnifies actual legal costs.
Q. Discuss the application of principle of Utmost Good Faith under Motor Insurance.
Ans. Application of principle of Utmost Good - In insurance contracts, the legal, doctrine of utmost good faith applies. This casts on the insured the duty to disclose all material facts that have a bearing on the insurance. A breach of this duty may make the contract void or voidable depending upon the nature of the breach.
The principle of utmost good faith is applicable to Motor Insurance in the same manner and with the same force as it is applicable to other classes of insurance.
The insured is under the duty to disclose all material facts that have a bearing on the insurance. For this purpose proposal forms is used. In this form the insured submits various material facts such as the type of vehicle, the geographical area of use, the physical condition of the driver, the driving history and traffic convictions of the driver, past loss
experience etc.
There is a declaration clause in the form. The effect of declaration is that the answers given in the proposal become warranties. The answers are required to be literally true and correct. Any wrong answer, irrespective of its materiality, will render the contract voidable by insurers. Thus it converts the common law duty into a contractual duty of utmost good faith. However under compulsory third party insurance the doctrine is modified. Section 149 of the Motor Vehicles Act places the duty upon Insurers to satisfy judgements and awards against persons insured in respect of third party risks. Q. Discuss in brief the application of following principles in Motor Insurance:
a) Contribution b) Subrogation c) Proximate Cause Ans.
a) Contribution - The principle of Contribution is applicable in contracts of indemnity. In motor insurance contribution arises when the same vehicle is insured under more than one policy. According to policy condition the loss is shared pro-rata between the insurers. b) Subrogation -Subrogation is the transfer of rights from the insured to the insurer on payment of loss under the policy. When the loss or damage to the vehicle is caused by the negligence of another person the insured has legal rights to claim against such person. These rights pass to the insurers on payment to the insured. Motor policies provide a condition for subrogation before the payment of the claim. In practice subrogation is modified by Knock for Knock agreement amongst insurers. According to this agreement when there is a collision between two vehicles, one of, which is responsible for the accident the OD Claim (under policy B) shall be paid by insurer of the vehicle.
(5)
c) Proximate Cause - According to he doctrine of proximate cause loss is payable if proximately caused by insured peril. This doctrine applies to motor insurance as to other classes of insurance. The loss or damage to the vehicle is payable only if it is proximately caused by on of the insured perils. The doctrine is also applicable to third party claims where in third party injury or property damage must be proximately caused by the negligence of the insured for which he is held legally liable to pay damages.
CLASSIFICATION OF MOTOR VEHICLES Q. Define Motor Vehicle. Classify Motor Vehicles for the purpose of Motor Insurance.
Ans. Definition of Motor Vehicle - The Motor Vehicle Act defines "Motor Vehicle" as
* a mechanically propelled vehicle adapted for use upon roads
* whether power of propulsion is transmitted thereto from an external or internal source
* it includes a chassis to which a body has not been attached and a trailer
* but does not include a vehicle running upon fixed rails. Classification of Motor Vehicles for the purposes of
insurance
For the purposes of insurance, motor vehicles are classified into three broad categories,
1.Private cars,
2.Motor cycles / Scooters and 3.Commercial vehicles.
4. Miscellaneous and special Types of Vehicles 1. Private Cars – Private Cars includes the following: (a) Vehicles used solely for social, domestic and pleasure purposes.
(b) Car of private type including station wagons, used for social, domestic and pleasure purposes and for the business or Professional purposes of the insured. These may be used by the insured or his employees for such purpose but the carriage of goods other than samples is not permitted. Use of such vehicles for the following is exclude:
i) Hire or reward ii) Racing
iii) Pacemaking reliability trial iv) Speed Testing
v) For any purpose in connection with the Motor Trade
(c) Three wheeled cars including cabin scooters used for private purposes.
2. Motor Cycles / Scooters – These include the following vehicles:
i) Mechanically propelled two wheelers with or without side car.
ii) Mechanically propelled three wheelers with engine capacity not exceeding 350 cc.
3. Commercial Vehicles - These include the following: 1) Goods Carrying Vehicles - Motor Tariff Categorises the Goods Carrying Vehicle as
i) Own Goods Carrier and
ii) General Cartage Carrier for rating purpose.
2) Trailers – These include trucks, carts, carriages or other vehicles without means of self propulsion including agricultural implements drawn or hauled by self-propelled vehicle.
3) Vehicles used for carrying passengers for hire or reward -A i) Passengers Carrying Vehicles with Carrying capacity upto 6 passengers.
ii) Three wheelers with a carrying capacity between 7 & 17 passengers.
(7)
iii) Other vehicles with a carrying capacity over 6 passengers.
B i) Taxis or Private Car Type Vehicles plying for public hire.
ii) Private Type Taxis let out on Private Hire direct from the Owner with or without meters and driven by the
Owner or an employee of the Owner.
iii ) Private Car type vehicles let out on Private Hire and driven by the Hirer or any driver with his permission. iv) Private Car Type Vehicles owned by Hotels and hired by them to their guests.
C Passenger Carrying Motorised Rickshaws
4. Miscellaneous and Special Types of Vehicles – Following are the few examples of vehicles in this category: i) Agricultural Tractors Pedestrian Controlled.
ii) Delivery Truck - Pedestrian Controlled. iii) Trailers towed by Tractors.
iv) Ambulances.
v) Cinema Film Recording& Publicity Vans. vi) Dumpers.
vii) Fire Brigade & Salvage Corps Vehicles viii) Road Rollers
ix) Excavators.
x) Mobile shops and Canteen Vehicles
FORMS OF MOTOR POLICIES Q. What are the forms of Motor Policies?
Ans. Motor policies are available in following two forms: 1) Form A Policy - This covers "Act" Liability.
2) Form B Policy - This covers 'Own Damage' losses and 'Act' Liability. It can also be extended to cover additional liabilities as provided in the Tariff, for example Increased Third Party Property Damage Liability, Personal Accident Risk, etc.
CHAPTER 2
LEGAL ASPECTS:
THE MOTOR VEHICLES ACT, 1988
IMPORTANT DEFINITIONS BEARING ON MOTORINSURANCE
Q. Define Contract Carriage and Stage Carriage and give the distinction between them.
Ans.
Contract Carriage – The M.V. Act defines Contract Carriage as a motor vehicle which carries passenger(s) for hire or reward and is engaged under a contract,
* whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein, and
* entered into by a person holding a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or agreed rate or sum on
i) a time basis, or
ii)from one point to another, and, in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey.
Contract Carriage includes a maxicab and a motorcab. Stage Carriage – The M.V. Act defines Stage Carriage as a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers either for the whole journey or for stages of the journey.
Distinction between Contract Carriage and Stage Carriage- The contract carriage is engaged for the whole of the journey between two points for carriage of a person or persons hiring it. It cannot pick up other passengers en route.
(9)
Where as the stage carriage runs between two points irrespective of any prior contract, and it can pick up passengers en route who pay the fare for the distance they propose to travel.
Q. Define the following: a) Gross Vehicle Weight b) Goods Carriage c) Light Motor Vehicle d) Maxicab e) Motorcab f) Private Service g) Public Service h) Public Place Ans.
a) Gross Vehicle Weight - Gross Vehicle Weight means in respect of any vehicle, the total weight of the vehicle and load certified and registered by the Registering Authority as permissible for the vehicle.
b) Goods Carriage - Goods Carriage means only motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods.
c) Light Motor Vehicle - Light Motor Vehicle (LMV) means a transport vehicle or omnibus, the gross vehicle weight (GVW) of either of which or a motor car or a tractor or road roller, the unladden weight of any of which does not exceed 7,500 Kgs.
d) Maxicab- Maxicab means any motor vehicle constructed or adapted to carry more than six, passengers, but not more than. twelve passengers, excluding the driver, for hire or reward.
e) Motorcab - Motorcab means any motor vehicle constructed or adapted to carry not more than six passengers, excluding the driver, for hire or reward.
motor vehicle constructed or adapted to carry more than six persons, excluding the driver, and ordinarily used for the purpose of carrying persons for, or in connection with, his trade or business otherwise than for hire or reward, but does not include a motor vehicle used for public purposes.
g) Public Service - Public Service Vehicle means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward, and includes a maxicab, a motorcab, contract carriage and stage carriage.
h) Public Place - Public Place means a road, street, way or other place whether thoroughfare or not, to which the public have a right of access, and includes any place or stand at which passengers are picked up or set down by a stage carriage.
Q. Discuss the following
a) Period or currency of driving licence
b) Classification of Goods Carrying Vehicles based on GVW
Ans. a) Period or currency of driving licence -
i) Transport vehicle carrying dangerous goods- Licence to drive a transport vehicle carrying goods of dangerous / hazardous nature, the license shall be effective for a period of one year and renewal thereof shall be subject to the condition that the driver undergoes one day refresher course of the prescribed syllabus.
ii) Other transport Licences - Other transport licences are valid for 3 years.
iii) Private Cars - In case of private cars, earlier, driving licence used to be valid upto 20 years till a person attains age of 40 years. Now, as per amendment, the driving licence of persons above the age of 50 years would be renewed for a period of 5 years at a time on payment of prescribed fees. b) Classification of Goods Carrying Vehicles based on GVW-
(11) LMV - Upto GVW 7,500 Kgs.
MMV - GVW 7,500 Kgs. To 12,000 Kgs. HGV GVW above 12,000 Kgs.
Necessity For Compulsory Third Party Insurance Q. Why there is compulsion For Third Party Insurance of a Motor Vehicle? What exemptions are provided by the M.V. Act?
Ans. Necessity For Compulsory Third Party Insurance - The law has made it obligatory that no motor vehicle shall be used without a third party insurance. Section 146 of the Motor Vehicles Act, 1988 provides that no person shall use except as a passenger, or allow any other person to use, a motor vehicle in a public place, unless the vehicle is covered by a policy of insurance complying with the requirements of the Act. As per Amendment Act 1994 an additional duty is caste upon the owner of the vehicle carrying dangerous or hazardous goods for a policy of insurance under the Public Liability Insurance Act , 1991.
This is to protect members of public travelling in vehicles or using the roads against motor vehicles accidents. A Court can only pass an award or decree for compensation. It cannot ensure actual payment, because the person held liable may be insolvent or may not have sufficient resources to meet the award. To overcome the situation, the law has made it obligatory that no motor vehicle shall be used without a third party insurance.
Exemption from Compulsory Third Party Insurance – following vehicles are exempted from compulsory third party insurance:
i) any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise.
ii) exemption may also be granted by the appropriate Government for any vehicle owned by:
vehicle is used for Government purposes connected with any commercial enterprise:
(b) any local authority;
(c) any State Transport undertaking.
However, the above exemption is made only if a fund is established and maintained by that authority for meeting any liability arising out of the use of any vehicle. The fund has to be established in accordance with the Rules framed under the Act.
Requirement of Policies
Q. What are the requirement under M.V. Act of a policy of insurance issued for a motor vehicle? Mention the limits of liabilities required to be compulsorily covered.
Ans. The policy of motor insurance is required to be issued by an 'authorised insurer. Section 147 of the Motor Vehicles Act, 1988 requires that the policy of insurance must provide cover: i) against any liability which may be incurred by the insured in respect of death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the carriage, or
ii) damage to any property of a third party; or
iii) against death or bodily injury to any passenger of a public service vehicle, caused by or arising out of the use of the vehicle in a public place.
The policy, however, shall not be required to cover: i) any contractual liability; or
ii) any liability in respect of death arising out of and in the course of employment of the employee of the Insured, or in respect of bodily injury sustained by such employee arising of out of and in the course of his employment. The policy must however cover liability arising under the Workmen's Compensation Act, 1923 in respect of death or bodily injury to any such employee
(a) engaged in driving the vehicle, or
(13) vehicle, or
(c) if it is a goods carriage, being carried in the vehicle. Transfer of Certificate of Insurance
Q. What are the provisions under M.V. Act regarding Transfer of Certificate of Insurance?
Ans. - Section 157 of the M.V. Act 1988 provides that where a person in whose favour a Certificate of Insurance has been issued, transfers to another person the ownership of the motor vehicle in respect of which the insurance was taken, then the Certificate of Insurance and the relative Policy shall be automatically deemed to be transferred in favour of the new owner from the date of transfer of ownership of the vehicle. Such deemed transfer shall include transfer off rights and liabilities of the said Certificate of Insurance and Policy of Insurance.
The transferee should apply within 14 days from the date of transfer on the prescribed form to the insurer for making the necessary changes in the Certificate of Insurance and in the Policy, and the insurer is obliged to make such changes in the said documents to give effect to the transfer of insurance.
Duty of Insurers to satisfy Judgements
Q. Discuss the duty of insurers to satisfy the judgement of court in respect of a third party claim under motor policy. What defences are available to insurers to resist such claim?
Ans. The duty of insurers to satisfy the judgement - Section 149 of Motor Vehicles Act, 1988 provides that if a judgement in respect of compulsory third party liability is obtained against an insured person, then the insurer has to pay to the third party the amount decreed plus costs and interest awarded, subject to the sum insured under the Policy. Thus it is the duty of the insurers to make payment to the third parties even though they may be entitled to avoid or cancel the Policy or may have avoided or cancelled the Policy.
Defences are available to insurers - The Act provides certain rights and defences to the insurers to resist third party claims. Before the commencement of the proceedings, the insurers are entitled to receive notice through the Court or the Claims Tribunals, as the case may be, of the bringing of the proceedings or in respect of any judgement awarded so long as execution is stayed thereon pending an appeal.
The insurer who receives the notice is entitled to be made a party thereto and to defend the action on any of the following grounds:
a) that there has been breach of a specified condition of the Policy, being one of the following condition, viz.:
(i) a condition excluding the use of the vehicle:
(a) for hire or reward, where vehicle is on the date of the contract of insurance a vehicle not covered by a Permit to ply for hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or (d) without side-car being attached, where the vehicle is a motor-cycle; or
(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving license during the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or
b) that the Policy is void on the ground that it was obtained by the non-disclosure of a material fact or by the representation of
fact which was false in some material particular.
The Act also provides that anything in the Policy which restricts the liability under the Policy towards the third parties by reference to any of the conditions relating to (a) above shall be of no effect.
(15)
The Act, however, provides that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the Policy by virtue only of this proviso shall be recoverable by the insurer from that person.
Rights of Third parties against Insurers on Insolvency of the Insured and Effect of Death of Insured Person Q. What are the rights of Third parties against Insurers on Insolvency of the Insured?
Ans. Section 150 Motor Vehicles Act, 1988 provides for the rights of third parties in the event of the insolvency of the insured or in the event of winding up when the insured is a Company. The Act provides that if, either before or after that event, any third party liability is incurred by the insured, his rights against the insurer under the Policy are transferred to the third party to whom the, liability was incurred. When such transfer takes place, the insurer will be under the same liability to the third party as he would have been to the insured person, but
(i) if the liability of the insurer to the insured person exceeds the liability of the insured person to the third party, the insured person's rights against the insurer in respect of the excess are not affected.
(ii) if the liability of the insurer to the insured person is less than the liability of the insured person to the third party, the rights of the third party against the insured person in respect of the balance are not affected.
In the event of an Insured becoming insolvent or making arrangements with his creditors ( if a company, being wound up) the rights of the Insured under the Policy will be transferred to and vest in the injured third party. In other words the injured third party is able to recover compensation direct from the Insurers.
party claim?
Ans. Section 155 of 1988 Act provides that if the insured person dies after incurring third party liability, then the cause of action survives against the insured's estate, or legal heirs or against the insurer. If this provision was not made, then the third party's right of action against the negligent owner of the vehicle would die with the death of the owner.
Motor Accidents Claims Tribunals
Q. Write an essay on Motor Accidents Claims Tribunals. Ans. - i) Constitution of MACT - Section 165 of Motor Vehicles Act, 1988 provides for the constitution of the Motor Accident Claims Tribunal by different State Governments for the purpose of speedy disposal of third party claims at a minimum cost. Such tribunals are presided over by a person of the rank of a District judge or High Court Judge.
ii) Procedure and Powers of MACT – Section 169 provides that where any Claims Tribunal has been constituted for any area, the Civil Courts have no jurisdiction to entertain any question relating to claims for motor accident claims compensation. The Claims Tribunals have all the powers of a civil court for the purpose of taking evidence on oath, enforcing the attendance of witnesses and of compelling the discovery and production of documents, etc.
The Motor Accident Claims Tribunals have exclusive jurisdiction to decide the claims with regard to death, personal injury as well as damage to third party property, irrespective of the amount involved in the property damaged.
iii) Application for Compensation – According to Section 166 of Motor Vehicles Act, 1988 an application for compensation arising out of an accident may be made:
a) by the person who has sustained the injury; or b) by the owner of the property;
c) where the death has resulted from the accident, by the legal representative(s) of the deceased; or
(17)
Application has to be made to the Claims Tribunal having jurisdiction over the area in which the accident occurred, or to the claims tribunal within the local limits whose jurisdiction the claimant resides or carries on business or within the local limits of whose jurisdiction the defendant resides. The application shall be in such form and shall contain such particulars as may be prescribed.
iv) Option regarding claims for compensation in certain cases - A claim for compensation under the Motor Vehicle Act and also under the Workmen's compensation Act, 1923 the person entitled to compensation may claim such compensation under either of these Acts but not under both. v) Award of the Claims Tribunal - Section 168 defines the duty and obligation of the Claims Tribunal to give prior notice of the third party's application for compensation to the Insurers as also giving opportunity to the Insurers of being heard.
The Claims Tribunal makes an award determining the amount of compensation, which appears to it to be just. The tribunal can award simple interest at such rates as it thinks fit, to be paid along with the award for compensation. When Award is made the Judgment debtor shall deposit the entire amount awarded with 30 (thirty) days of the announcement of the Award.
vi) Impleading Insurer in certain cases – According to Section 170 where in the course of an inquiry, the Claims Tribunal is satisfied that
(a) there is collusion between the person making the claim and the person against whom tfi6 claim is made ( that is, there is collusion between the claimant and insured ), or
(b) the person against whom the claim is made, has failed to contest the claim,
it may direct that the concerned Insurer be impleaded as a party to the proceedings. The Insurer so impleaded shall thereupon have, without prejudice to the provisions contained in Section 149 (2), the right to contest the claim on all or any
of the grounds that are available to the person against whom the claim has been made.
vii) Appeals - Any person aggrieved by an award of a Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court. No appeal by the person who is required to pay the amount shall be entertained unless he deposits with the High Court Rs. 25000 or 50% of the awarded amount, whichever is less.
The High Court may entertain the appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
According to Section 173 no appeal is permissible if the amount in dispute is less than Rs. 10000.
Q. Discuss the features of provision regarding liability without fault under the M.V. Act.
Ans. No Fault Liability - Section 140 of M.V. Act, 1988 provides for Liability without Fault. Following are the feature of this provision
-i) Strict Liability - This is a strict liability. The claimant involved in a motor vehicle accident is not required to prove wrongful act, neglect, or default (i.e. negligence) on the part of the owner of the vehicle or by any other person. The claim under these provisions is not defeated or affected in any way, by my wrongful act, neglect or default on the part of the claimant; nor can be quantum of compensation be reduced on the basis of the claimant's share of responsibility for the accident. In other words, the legal defence of 'contributory negligence' is not available to the motorist and his insurers. ii) Application of Provision - these provisions apply in cases where the claimant suffers death or permanent disablement. iii) Amounts of Compensation - The amounts of compensation are fixed as follows: Death, Rs. 50000, and Permanent Disablement Rs. 25000.
(19)
iv) Object of the provision - The object behind the no-fault principle is to get minimum statutory relief expeditiously to the victim of the road accident or his legal representative. Q. What is Permanent Disablement fir the purpose of No-fault Liability?
Ans. Permanent Disablement – According to Section 142 permanent disablement shall mean injury or injuries involving (a) permanent privation of the sight of either eye or the hearing of either ear, or privation of any member or joint; or (b) destruction or permanent impairing of the powers of any member or joint; or
(c) permanent disfiguration of the head or face. Hit and Run Accident Q. Write a short note on Hit and Run Accident
Ans. Hit and Run Accident - Hit and Run Accident is a motor 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. Section 161 of the M.V.Act. provides for payment of following compensation for such accidents:
i) Death - Rs. 25000
ii) Grievous hurt - Rs. 12500
As per the new M.V. Act, the payment of Compensation shall be made by G.I.C. and its subsidiaries.
Q. What is grievous hurt under M.V. Act for the purpose of compensation under hit and run accident?
Ans. Grievous Hurt - According to Section 161 grievous hurt shall have the same meaning as in the Indian Penal Code. Section 320 of the Indian Penal Code has designated the following kinds of hurt as grievous:
i) Emasculation
ii) Permanent privation of the sight of eye.
iv) Privation of any member or joint.
v) Destruction or permanent impairing of the powers of any member or joint.
vi) Permanent disfiguration of the head or face. vii) Fracture or dislocation of a bone or tooth.
viii) 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.
Compensation on Structural Formula Basis
Q. What is Structural formula Basis of compensation to road accident victims? How the compensations are determined under this provision of M.V. Act?
Ans. Compensation on Structural Formula Basis - Section 163 (A) of M.V. Act has introduced a new provision for payment of compensation to road accident victims on Structural Formula Basis. Under this Section the amount of compensation payable to claimants is calculated in a tabular form and shown in the Schedule. For any claim compensation under this Section, the claimant is be required to plead or establish that the death or permanent disablement in respect of which the claim has been made, was due to any wrongful act or neglect or default of the owner(s) of the vehicle(s) concerned or of any other person. Thus, the compensation shall be payable on the basis of ‘No Fault’. However, he scheme is optional, and if the claimant feels that the amount prescribed in the Schedule is not acceptable, a claim can be filed under Section 166 of the Motor Vehicles Act.
Computation of Amount of Compensation - Following is the method of computation of compensation under Section 163 A :
(a) Fatal Accidents - In case of fatal accidents a table of compensation is provided showing the amounts payable depending on the age of the victim and the multiplier applicable. The amount of compensation so arrived at in case of fatal accident claims reduced by one-third in consideration
(21)
of the expenses which the victim would have incurred towards maintaining himself, had he been alive.
It is provided that the amount of such compensation shall not be less than a specified amount (at present Rs. 50,000)
Besides the amount of compensation shown above for fatal cases, the schedule also indicates General Damages of specified amounts payable in case of death for:
1.Funeral expenses.
2.Loss of consortium, if beneficiary is the spouse. 3.Loss of estate.
4.Medical expenses incurred before death not exceeding a specified amount. These are to be supported by bills/ vouchers
(b)Disability in non-fatal accidents - In case of non-fatal accidents Compensation is payable for loss of Income, if any, for actual period of disablement not exceeding 52 weeks, Plus either of the following:
In case of payment total disablement, the amount payable shall be arrived at by multiplying the annual loss of income by the "multiplier" applicable to the age on the date of determining the compensation, or
In case of permanent partial disablement, such percentage of compensation which would have been payable in the case of permanent total disablement as specified in the above item.
Besides the amount of compensation shown above the schedule also indicates General Damages of specified amount are payable in case of injuries and disabilities for :
1.Pain and suffering for grievous and non-grievous injuries.
2.Medical expenses incurred not exceeding a specified amount as one time payment. These are to be supported by bills/ vouchers.
The Schedule also specifies notional income of non-earning persons.
CHAPTER 3
LOK ADALAT / LOK NYAYALAYA
AND
JALAD RAHAT YOJANA
Lok Adalat or Lok NyayalayaQ. Explain the concept of Lok Adalat. What are advantages of Lok Adalat Settlements from the viewpoint of insurance companies?
Ans. - Nature and Procedure - For the purpose of bringing about voluntary settlement of disputes Hon'ble Shri P.N.Bhagwati, the ex-Chief Justice of the Supreme Court, conceived a unique concept Lok Adalat or Lok Nyayalaya.
Due to enormous increase in the number of accidents and the number of persons maimed or killed, the MACT Courts are faced with a very large number of cases. The net result is that it takes years through the MACT for disposal of claims. Arising from this problem, G.I.C supported the concept and adopted settlements in Lok Adalat. to dispose of such cases speedily in an informal way but with judicial backing and in a spirit of compromise. This movement, in the last five years. resulted in expeditious disposal.
For bringing about amicable and speedy settlement of cases pending before the MACT, Lok Adalat sessions are held from time to time in close liaison with the local Legal Aid Committee of the Legal Aid Board of each State and the MACT or the District and Sessions Judge. Following procedure is adopted:
i) Consent application from parties concerned - Consent application well in advance is taken from the applicant, dealing advocates for the parties, and the insurer is obtained for placing the cases before the Lok Adalat.
ii) Notice to parties concerned - Notice under registered post is issued to the applicant and his advocate and to the
(23)
concerned insurer calling upon them to be present in the Lok Adalat on the appointed date and time.
iii) Compromise - Efforts are made to bring the parties to a fair compromise without coercion or forces and the agreement arrived at is reduced in writing on the prescribed form.
iv) Submission of compromise memo to the concerned Claims Tribunal - The compromise memo is submitted to the Claims Tribunal for passing the final order and apportionment of the compensation in terms of the settlement.
v) Payment - The insurers are required to deposit the cheque for the amount agreed with MACT within specified time from the date of the agreement to settle.
As per current guidelines of G.I.C., only those cases where claim made to MACT is upto Rs. 500000 are to be considered in the Lok Adalat sessions.
Advantages of Lok Adalat Settlements - Settlement of T.P. Claims in the Lok Adalat is advantageous to insurance companies for the following reasons:
a) the insurers get an opportunity to clear up a large backlog of motor claims cases;
b) the claim is deemed have been settled once and for all and there is no further litigation by way of appeal to the higher Courts;
c) speedy settlement gives satisfaction to third party as well as to the insured.
d) serves as a means of good publicity, good name and prestige to the insurance company.
Jald Rahat Yojana
(Pre-litigation Scheme for settlement Third Party Motor Insurance Claims)
Q. “Jald Rahat Yojana is an unique Pre-litigation Scheme for settlement Third Party Motor Insurance Claims”. Discuss.
was introduced by General Insurance Corporation of India with effect from 14th March. 1992. This is a Pre-litigation Scheme for settlement Third Party Motor Insurance Claims for motor accident victims. It provides quick payment of compensation to victims of road accidents without their adopting legal proceedings. In Lok Adalat only cases pending before MACT are taken up for compromise settlement, whereas under the Jalad Rahat Yojana injured persons or legal heirs of the victims need not have to go to MACT at all. Cases can be straightaway taken to this forum.
The procedure – For disposal of T.P. Claims a panel consisting of following persons is constituted:
i) a retired Judge,
ii) a medical practitioner and
iii) a retired executive of an insurance company having sound knowledge and clear understanding of motor accident claim cases.
This panel jointly examines individual cases on a regular basis on certain specified time and terms and offer compromise settlement of claims. If the parties accept such offers, settlement can be promptly finalised.
In the initial stage, the Scheme applies to Non-fatal bodily injury claims of road accident victims above 18 years of age. It covers both "fault" and "no-fault" liability claims.
To settle any claim under this scheme the claimants’ application is to be supported by the following documents: a) Copy of First Information Report lodged with the Police. b) Registration number and Insurance particulars of offending vehicle.
c) Medical certificates in support of claim. d) Medical bills and hospital records. e) Proof of age and income.
f) Passport size photograph of victim.
(25)
under the Scheme. However some time limit ought to be set keeping in view the statutory limit under the Motor Vehicles Act.
Benefits of the Scheme - The Jald Rahat Yojana offers following benefits to public:
i) ‘No Expenses’ and Litigation Free Remedy – This is a litigation free remedy to get compensation for road accidents. The claimant is not required to incur any expenses on Court fees and lawyer’s fees. The claimant is of course free to take assistance from lawyers.
ii) Early and easy settlement – the scheme provides settlement of claims within shortest possible time of 2 to 3 months.
iii) Option open to go to MACT – Settlement is not binding under this scheme. If the claimant is not satisfied with the compensation offered, the offer can be rejected and the claimant can go to MACT for getting compensation.
iii) Just and fair assessment of claims -The scheme offers a just and fair assessment of claims as it is done by independent panels of retired judges, medical practitioners and retired insurance executives.
Settlement of T.P. Claims under this scheme is advantageous to insurance companies for the following reasons:
a) the insurers get an opportunity to clear up cases without going for litigation. If many claims get settled through this machinery, it is felt that smaller number of cases will go to MACT Courts.
b) the claim is deemed have been settled once and for all and there is no further litigation by way of appeal to the higher Courts;
c) speedy settlement gives satisfaction to the insured.
d) serves as a means of good publicity, good name and prestige to the insurance company.
CHAPTER 4
MOTOR POLICIES
Policy A and Policy B
Q. What is the difference between Motor Policy A and Policy B?
Ans. India Motor Tariff provides for following two types of policies:
Policy 'A' - Policy ‘A’ covers liability to public risks as required under the M.V.Act. In this type of Insurance the loss/ damage to the Motor Vehicle itself, generally known as 'own damage' is not covered.
Policy 'B' - Policy 'B'. covers third party (T.P.) liability risk as per the Act and own damage. This is a wider cover and called as 'Comprehensive Insurance'.
Motor vehicles are generally classified by Insurers into a) Private Cars, b) Motor cycles, Motor Scooters, Auto cycles etc. and c) Commercial Vehicles. Both Policy A and Policy B are available to all these classes of Motor Vehicles.
Policy A is issued in a Standard Form which is uniformly applicable to all above classes of vehicles. Whereas Policy B varies with the class of vehicle covered.
Policy 'B' has two sections in the case of Private car and Motor Cycle/Scooters - Section I Loss or Damage and Section II Liability to Third parties. In the case of Commercial vehicles there are three sections - Section I Loss or Damage, Section II Liability to Third parties and Section III Towing Disabled Vehicle.
Scope of Standard Form for A Policy
Q. Discuss the cover provided by Motor Policy A.Ans. - Policy A is issued in a Standard Form which is uniformly applicable to all above classes of vehicles.
(27)
Scope of Cover - Liability to Third Parties – The policy provides:
(1) Subject to the limit of liability as laid down in the Motor Vehicles Act, 1988, the Insurance Company will indemnify the Insured in the event of accident arising out of the use of the motor vehicle anywhere in India, against all sums, including claimant's costs and expenses, which the Insured shall become legally liable to pay in respect of
i) death of or bodily injury to any person, and/or ii) damage to any property of third party.
(2) The Company will also pay all costs and expenses incurred with its written consent.
(3) The Company will indemnify any driver who is driving the insured motor vehicle on the insured's order or with his permission.
(4) In the event of the death of any person entitled to indemnity under the policy, the Company will indemnify his legal representatives in terms of and subject to the limitations of the policy.
(5) The Company may at its own option
-A) arrange for representation at any Inquest of Fatal Injury in respect of death which may be the subject of indemnity, and B) undertake the defence of proceedings in any Court of Law in respect of any liability which may be the subject of indemnity under policy.
Q. Explain the following clauses under Motor Policy A: a) Application of Limits of Indemnity
b) Avoidance of certain terms and Right of Recovery Ans.
a) Application of Limits of Indemnity - In the event of any accident involving indemnity to more than one Person, any limitation of the amount of any indemnity shall apply to the aggregate amount of indemnity to all persons indemnified and such indemnity shall apply in priority to the Insured.
b) Avoidance of certain terms and Right of Recovery - The Motor Vehicles Act provides that the judgement obtained against insurers shall not be defeated by the incorporation of exclusion clauses in the policy other than those authorised by Section 149 of the Act. All motor policies therefore contain a clause called "Avoidance of certain terms and right of recovery" reading as under:
"Nothing in this policy or any endorsement hereon shall affect the right of any person to recover an amount under or by virtue of the provision of the Motor Vehicles Act.
But the Insured shall repay to the Company all sums paid by the Company, which the Company would not have been liable to pay but for the said provisions shall for all purpose be deemed to have been abandoned and shall not thereafter be recoverable under the policy”.
Thus this clause in its effect provides that any provision in the policy which has the effect of denying payment of claim to any person who is entitled to receive it by virtue of provisions of the Motor Vehicles Act, is of no effect. Thus, the interests of third parties are safeguarded.
Q. What are the General Exceptions under Motor Policy A?
Ans. Following are the General Exceptions under Motor Policy A:
(1) The Insurer shall not be liable for any claim arising whilst the, motor vehicle is
a) being used otherwise than in accordance with Limitation as to Use, or
b) being driven by any person other than a driver as stated in Driver's Clause.
(2) There is no liability in respect of any claim arising out of any contractual liability.
(3) Except in so far as is necessary to meet the requirements of the Motor Vehicles Act, the Insurance Company shall not
(29)
be liable for death or bodily injury arising out of and in the course of employment of a person in the employment of the Insured or in the employment of any person who is indemnified under the Policy.
(4) Except so far as is necessary to meet the requirements of the Motor Vehicles Act, the Company shall not be liable in respect of death or bodily injury to any person (other than a passenger carried by reason of or in pursuance of a contract of employment) being carried in or upon or entering or mounting or alighting from the motor vehicle at the time of occurrence of the event out of which any claim arises.
(5) War and allied perils. (6) Nuclear Risk.
Private Car B Policy
Q. Describe the cover offered by Section I of Private Car Policy B and exclusions applicable to this section.
Ans. Risks Covered under Section I - Loss or Damage of Private Car Policy B – This section is also known as ‘Own Damage’ Section. It provides indemnity to the Insured against loss or damage to the insured Motor Car and/or its accessories whilst thereon:
a) by fire, explosion, self-ignition or lightening; b) by burglary, housebreaking or theft;
c) by riot and strike;
d) by earthquake (fire and shock damage);
e) by flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost;
f) by accidental external means; g) by malicious act;
h) by terrorist activity;
i) whilst in transit by road, rail, inland waterway, lift, elevator
or air;
Protection and Removal Costs - If the motor car is disabled by reason of loss or damage covered under the policy, the insurer will bear reasonable cost of protection and removal to the nearest repairers and of redelivery to the insured but not exceeding in all Rs. 1,500/- in respect of any accident.
Authorisation for Repair - The insured may authorise repairs necessitated by damage covered under the policy, provided that :
(a) the estimated cost of such repairs does not exceed Rs.
500/-(b) the insurer is furnished forthwith a detailed estimate of the cost, and
(c) the insured gives the insurer every assistance to see that such repair is necessary and the charge reasonable.
Exclusions under Section I - The insured will not be liable to make any payment for the following:
(a) consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures and breakage. (b) damage to tyres unless the motor car is damaged at the same time when the liability of the insurer is limited to 50% of the cost of replacement.
(c) any accidental loss or damage suffered whilst the insured or any person driving with the knowledge and consent of the insured is under the influence of intoxicating liquor or drugs. Q. Explain the following under Motor Car Policy B:
a) Loss to Accessory b) Consequential loss c) Mechanical Breakdown
Ans. a) Loss to Accessory - The parts which are directly supplied by the manufacturer along with the car, but are not essential for the running of the motor car, are considered as accessories. The engine of a car, is an essential part for the running of the vehicle. So it is not an accessory. Whereas
a taximeter will be considered as an accessory of a taxi cab because the vehicle can run without it.
Loss or damage of accessories are covered only if the accessories are on the motor car. For example, the stepny is removed from the car and kept separately in a garage from where it is stolen, the loss will not be covered by the policy.
Accessory should be distinguished from Extra Fittings. Radios, tape recorders, air conditioners and other electric or electronic items, etc. which are fitted on the motor cars are not accessories. They will be considered as extra fittings and will not be covered unless they are separately described and valued in the Schedule of the Policy.
b) Consequential Loss - The policy covers only direct loss caused by an accident to the car and not the consequential loss. The insured may suffer loss of use of the car during repairs in the form of cost and expenses of alternate transportation. This is a consequential loss which is not covered.
c) Mechanical Breakdown – The policy does not cover mechanical or electrical breakdown, failures, breakages. The reason being they are associated with wear and tear. However, subsequent damage following mechanical breakdown is covered. If the steering rod breaks and causes an accident resulting in damage to the car, claim in respect of breakage in steering is not payable, but subsequent damage to the car is accidental damage and claim in respect of that will be admissible.
Q. Describe the cover granted by Section II-Liability to Third Parties of Private Car Policy B.
Ans. Cover granted by Section II-Liability to Third Parties of Private Car Policy B – This Section provides the following coverage:
1. Liability to Third Party - This section provides indemnity to the insured in the event of accident caused by or arising out of the use of the motor car against all sums, including
(32)
claimant's cost and expenses, which the insured shall become legally liable to pay in respect of
(i) death or bodily injury to any person, including occupants carried in the motor car, provided such occupants are not carried for hire or reward.
This does not cover the employees of the insured as the risk falls under the Workmen's Compensation insurance policy. However, as required by the Motor Vehicles Act, workmen's compensation liability towards a paid driver is covered under this section.
(ii) damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured.
2. Legal costs and expenses - The insurer will also pay all legal costs and expenses incurred with its written consent. 3. Indemnity to driver - The indemnity under this Section is available to any driver who is driving the motor car or with his permission, provided that such driver shall as though he were the insured observe, fulfill and be subject to the terms, exceptions and conditions of the policy in so far as they can apply.
Limits of Liability
Under Section- II- 1 (i) - As per Motor Vehicles Act, 1988 (The Act provides for unlimited liability in respect of third party death or bodily injury).
Under Section- II- 1 (ii)Rs. 6,000/- in respect of any one claim or series of claims arising out of one event.
For third party property damage the limit provided is that required by the Act . The tariff however provides for increased limits upto unlimited liability for T.P. property damage, on Q. What are the general exceptions under Private Car Policy B which are applicable to both the sections of the policy.
Ans. - General Exceptions - Private Car Policy B is subject to certain general exceptions which are applicable to both the sections of the policy. According to these exceptions the Insurer shall not be liable in respect of the following:
(1) Any accident, loss, damage or liability caused, sustained or incurred outside the Geographical Area described in the Policy.
(2) Any claim out of any contractual liability. (3) Whilst the insured vehicle is
-(i) being used otherwise than in accordance with the limitations as to Use.
(ii) being driven by any person other than a Driver as stated in the Driver's Clause.
(4) Nuclear risks
(5) Any accident, loss, damage or liability directly or indirectly arising from nuclear weapons material.
(6) War and Allied Perils.
Q. Discuss the following under Private Car Policies: a) Limitations as to Use under Private Car Policy b) Driver’s Clause
Ans. a) Limitations as to Use under Private Car Policy – This clause under the policy reads as under:
"Use only for social, domestic and pleasure purposes and for the Insured's own business.
The Policy does not cover the use for hire or reward or for organised racing, pacemaking, reliability trials, speed testing, the carriage of goods (other than samples) in connection with any trade or business or use for any purpose in connection with Motor Trade."
b) Driver’s Clause - This clause under the policy reads as under:
Driver: Any person including Insured
-Provided that the person driving is holding an effective driving licence at the time of accident and is not disqualified from holding or obtaining such a licence Provided also that the
(34)
person holding an effective learner's license may also drive the vehicle and such a person satisfies the requirements of Rule 3 of the Central Motor Vehicles Rules, 1989.
Conditions of the Policy
Q. What are the conditions under Private Car Policy B? Ans. Following are the conditions under Private Car Policy B: (1) Notice of loss:
- Notice should be given immediately to the insurer upon the occurrence of any accident, loss or damage and, in the event of any claim the insured should give all information and assistance as the insurer may require.
- Every letter, claim. writ, summons, etc. should be forwarded to the insurer immediately on the receipt of insured.
-In the event of any impending prosecution, inquest or fatal inquiry, the insured should immediately inform the insurer in writing.
- In case of theft or other criminal act which may be the subject of a claim, the insured should give immediate notice to the Police and cooperate with the insurer in securing the conviction of the offender.
(2) No, admission, offer, promise or payment:
- The insured should not settle or make any payment in respect of any claim, or admit liability or make any other admission with respect to the accident or any claim arising there from without the written consent of the insurer.
- The insurer shall be entitled, if he so desires, to take over and conduct in the name of the insured , the defence or settlement of any claim or to prosecute in the name of the insured any claim for indemnity. The insured should give any information or assistance which the insurer may require for the purpose of resisting or settling any claim.
(3) Indemnity:
- The insurer has the option to repair, reinstate or replace the motor car or part thereof and / or its accessories or may pay in cash the amount of the loss or damage.
- In any event, the liability of the insurer shall not exceed the value of parts damaged or lost less depreciation plus reasonable cost of fitting. In no case shall the liability of the insurer exceed the insured's estimate of value of the motor car (including accessories thereon) at the time of the loss or damage, whichever is less.
(4) Safeguarding the vehicle from loss or damage:
- The insured is expected to take all reasonable steps to safeguard the motor car from loss or damage.
-He is also obliged to maintain it in an efficient condition. -In the event of any accident or breakdown the motor car should not be left unattended without proper precaution being taken to prevent further damage or loss.
-If the motor car is driven before necessary repairs are effected, any extension of the damage or any further damage shall be entirely at insured's own risk.
(5) Cancellation:
- The insurer may cancel the policy by sending seven days notice by registered letter to the insured, and in such event he will return to the insured the premium paid less the prorata portion thereon for the period the policy has been in force. - The policy may be cancelled by the insured on seven days notice and provided no claim has arisen during the currency of the policy, the insured shall be entitled to a return of premium, less premium at the insurance company's Short Period Rates for the period the policy has been in force.
- However where the ownership of the vehicle is transferred, the policy cannot be cancelled, unless evidence that the vehicle is insured elsewhere is produced.
(6) Contribution :
If at the time any claim arises, there is any other existing insurance covering the same loss, damage or liability, then the insurer shall not be liable to pay or contribute more than its rateable proportion of such loss, damage, compensation, costs or expenses.
(36) (7) Arbitration:
-This condition provides for settlement of disputes under the policy through arbitration which is a less expensive and faster method of settlement than litigation. Only disputes regarding the amount or quantum of the claim can be referred to arbitration. If the insurer has disputed or denied liability under the policy, then the insured will have to take recourse to a court of law.
-The arbitrator has to be appointed in writing by the parties in difference.
- If the parties cannot agree upon a single arbitrator, then two disinterested persons are to be appointed as arbitrators, of whom one shall be appointed in writing by each of the parties. -If either party shall refuse or fail to appoint an arbitrator within two calendar months after receipts of notice in writing by the other party in accordance with the provisions of the Arbitration Act, 1940 then the other party shall be at liberty to appoint a sole arbitrator.
In case of disagreement between the arbitrators, the difference will have to be referred to the decision of an Umpire, who has to be appointed by the arbitrators in writing before entering on the reference. The Umpire has to sit with the arbitrators and preside at the meetings.
It shall be a condition precedent to any right of action or suit upon the policy that award by such arbitrators or Umpire of the amount of the loss or damage shall be first obtained.
A claim will be deemed to be abandoned or time-barred if a suit is not filed in a court of law within 12 calendar months from the date the insurer declines liability for the claim,. Thus this condition stipulates a time limit for filing suit.
(8) Observance of conditions as precedent to liability: Due observance and fulfillment of the terms, conditions and endorsement of the policy and the truth of the statements and answers in the proposal form shall be the conditions precedent to any liability of the insurer under the policy.
Q. Write a short note on Bonus/Malus Clause
Ans. Bonus/Malus Clause - The insured should always be rewarded by way of reduction in premium for good risk and penalised for bad risk. Under erstwhile Motor Tariff there was only reward by way of No Claim Bonus. But with the introduction of the new Motor Tariff, effective from Ist April, 1990 a new concept is introduced in India which provided loading of premium for the insured who made a claim or claims under his policy. This is provided by Bonus/Malus Clause. Under this clause there is a discount, called Bonus for the claims free period which is given on renewal premium. Similarly if the insured lodges a claim in his policy, loading is applied on the renewal premium which is called Malus. No claim discount is allowed if policy is renewed within 90 days of the expiry of the previous policy. Percentage of bonus/malus is given in the policy.
Motor Cycle "B" Policy
Q. Describe the cover offered by Section I of Motor Cycle Policy B and exclusions applicable to this section.
Ans. Risks Covered under Section I - Loss or Damage of Private Car Policy B – This section is also known as ‘Own Damage’ Section. It provides indemnity to the Insured against loss or damage to the insured Motor Cycle and/or its accessories whilst thereon:
a) by fire, explosion, self-ignition or lightening; b) by burglary, housebreaking or theft;
c) by riot and strike;
d) by earthquake (fire and shock damage);
e) by flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost;
f) by accidental external means; g) by malicious act;
h) by terrorist activity;
(38) elevator or air;
j) by landslide / rockslide.
(You shall kindly observe that the risks covered are the same as those enumerated in the Private Car "B" Policy.)
Protection and Removal Costs - If the motor cycle is disabled by reason of loss or damage covered under the policy, the insurer will bear reasonable cost of protection and removal to the nearest repairers and of redelivery to the insured but not exceeding in all Rs.300 /- in respect of any accident.
Authorisation for Repair - The insured may authorise repairs necessitated by damage covered under the policy, provided that :
(a) the estimated cost of such repairs does not exceed Rs.
150/-(b) the insurer is furnished forthwith a detailed estimate of the cost, and
(c) the insured gives the insurer every assistance to see that such repair is necessary and the charge reasonable.
Exclusions under Section I - The insured will not be liable to make any payment for the following:
(a) consequential loss, depreciation, wear and tear, mechanical or electrical breakdown, failures and breakage. (b) damage to tyres unless the motor cycle is damaged at the same time when the liability of the insurer is limited to 50% of the cost of replacement.
(c) Loss of or damage to accessories by burglary, housebreaking or theft, unless the Motor Cycle is stolen at the same time.(This is additional exclusion in Motor Cycle Policy which do not appear under Motor Car Policy.)
(d) any accidental loss or damage suffered whilst the insured or any person driving with the knowledge and consent of the insured is under the influence of intoxicating liquor or drugs. (You shall kindly observe that except exception (d) other
exceptions are the same as those enumerated in the Private Car "B" Policy.)
Q. Describe the cover granted by Section II-Liability to Third Parties of Motor Cycle Policy B.
Ans. Cover granted by Section II-Liability to Third Parties – This Section provides the following coverage:
1. Liability to Third Party - This section provides indemnity to the insured in the event of accident in the event of any accident involving the insured vehicle against all sums which the insured shall become legally liable to pay in respect of (i) death of or bodily injury to any person, including person conveyed in or on the Motor Cycle, provided such person is not carried for hire or reward;
(ii) damage to property other than property belonging to the insured or held in trust or in the custody or control of the insured.
It is provided the insurer shall not be liable in respect of death, injury or damage caused or arising beyond the limits of any carriageway or thoroughfare in connection with the bringing of the load to the Motor Cycle for loading thereon or taking away of the load from the Motor Cycle after unloading therefrom.
2. Legal costs and expenses - The insurer will also pay all legal costs and expenses incurred with its written consent. 3. Indemnity to driver - The indemnity under this Section is available to any driver who is driving the motor cycle with insured’s permission, provided that such driver shall as though he were the insured observe, fulfill and be subject to the terms, exceptions and conditions of the policy in so far as they can apply.
Limits of Liability
Under Section- II- 1 (i) - As per Motor Vehicles Act, 1988 (The Act provides for unlimited liability in respect of third
