Court affirms that insurance companies cannot deny compensation to pillion riders under bundled policies, setting aside "pay and recover" directives.
In a significant ruling, the Madras High Court has reiterated the liability of insurance companies to compensate pillion riders under a two-wheeler bundled insurance policy. The decision came in the case of M/s. ICICI Lombard GIC Ltd. versus S. Barkathulla and others, where the insurance company had contested its liability to pay compensation for the death of a pillion rider, Rahamathulla, in an accident involving a two-wheeler.
The bench, comprising Justices C.V. Karthikeyan and K. Rajasekar, dismissed the insurance company's appeal, which argued that the pillion rider was not covered under the "Act Only Policy." The Court held that under the "Two-wheeler Bundled Policy," the coverage includes third-party liabilities, which extends to occupants of the insured vehicle, such as pillion riders.
The appellant, ICICI Lombard, contended that the policy in question was an "Act Only Policy" and did not cover pillion riders. However, the Court pointed out that the policy was a "Bundled Policy," which, as per Section II - Liability to Third Parties, inherently includes coverage for occupants in the insured vehicle.
The Court referred to a previous Supreme Court judgment that distinguished between "Act Only Policies" and "Comprehensive/Package Policies," noting that the bundled policy falls under the latter category, thereby encompassing third-party liabilities, including those of pillion riders.
Furthermore, the Court highlighted that the policy in question included a five-year third-party liability coverage, and since the accident occurred within this period, the insurance company was obligated to pay the compensation. The Tribunal's earlier directive of "pay and recover" from the vehicle owner was set aside, holding the insurance company directly liable.
The Court also declined to interfere with the quantum of compensation awarded by the Tribunal, allowing the claimants to withdraw the amount as per the Tribunal's apportionment.
This judgment reaffirms the broader coverage provided under two-wheeler bundled policies and emphasizes the responsibility of insurance companies to fulfill their obligations towards third-party claimants, ensuring that victims or their families receive timely compensation.
Bottom line:-
Insurance Law - Liability under "Two-wheeler Bundled Policy" - Insurance company cannot escape liability for compensation to pillion rider under "Bundled Insurance Policy" - Third Party Liability Coverage includes occupants in insured vehicle.
Statutory provision(s): Motor Vehicles Act, 1988, Section II Liability to Third Parties
M/s. ICICI Lombard GIC Ltd. v. S. Barkathulla, (Madras)(DB) : Law Finder Doc id # 2935228
