Individuals can get two types of vehicle insurance policies in India- third-party liability insurance and comprehensive insurance. Third-party liability coverage is an insurance policy where the insurance company provides financial protection to the policyholders in case they are held legally responsible for causing bodily injury, property damage, or personal harm to a third person. Without a third-party insurance policy, individuals would be personally liable for expenses, potentially leading to severe financial strain and legal actions in case of any harm or damage to the other person. This coverage ensures claim settlement in accidents, offering peace of mind to the policyholders.
In this blog, we will discuss about third party liability coverage.
Minu B. Mehta and Another vs Balkrishna Ramchandra Nayan and Another
In this case, the appellant (Minu B. Mehta), the truck owner, refused to take liability for an accident with a car driven by the respondent, a surgeon named Dr. Balkrishna Ramchandra Nayan. The truck was insured by an insurance company.
The collision resulted in injuries, medical expenses and loss of income for the respondent. He claimed a sum of Rs. 3 lakhs for the damages with interest from the appellants.
But the appellant refused to give compensation, citing that the accident occurred due to a brake ring defect. There was no rash driving and negligence by the driver.
During the proceeding, the Motor Accident Claims Tribunal examined the evidence and concluded that the accident was due to the lorry driver's negligence, dismissing the mechanical failure. It was decided that the sum of 1,43,400, along with interest must be given to the respondent. However, both the insurance company and the lorry owner rejected the claim settlement and appealed against the decision of the Bombay High Court.
The insurance company said that it is only liable to pay Rs. 20,000 under the policy. The High Court ordered the insurance company deposit to Rs. 20,000 with interest for a later determination of liability.
Mr. Nariman, the counsel who was presenting the owner said that the High Court did not address the question of whether the accident occurred due to rash and negligent driving of the lorry and the compensation was high. Hence, the matter moved to the Supreme Court.
The Supreme Court ruled in favour of the High Court. Moreover, it also stated that the liability of the owner and the insurance company is established as joint to give the amount of damages to the respondent.
Here's how a third-party insurance policy works
In a third-party insurance policy, the policyholder pays the premium to the insurance company to get coverage for his vehicle. The premium amount is determined based on factors such as the type of vehicle and the insurance company's policies.
If the policyholder meets with an accident that causes injury or damage to a third party, the affected individual is eligible to ask for compensation and file a claim against the policyholder's insurance. The insurance company will assess the damage and cost of repair and settle the claim accordingly.
But it is to be noted that a third-party insurance policy does not provide a settlement amount if the policyholder is under the influence of alcohol or drugs during the accident. Raising a claim in such cases will result in claim rejection-related issues.
Conclusion
If you want help to know about the features of third party insurance policies or facing any claim-rejected issues, you can always contact insurance subject matter experts for their guidance.
