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Insurance when accident caused by insured (deceased) having a third party policy

In Smt. Mangala Wd/O Vijay Khandar ... vs National Insurance Co. Ltd., the issue involved in this appeal before the Bombay High Court was about liability of insurance company to pay as per clause of ' personal accident cover' in the insurance policy. The issue is about extent of liability of insurance company when the insured/owner of the Jeep was himself the driver-cum-deceased and when no other vehicle is involved. The issue is whether the Motor Accident Claims Tribunal (M.A.C.T) has got jurisdiction to decide such claim petition.

The heirs of the deceased had claimed compensation from the insurer through th MACT under Section 163-A of the Motor Vehicles Act (MV) which was rejected by the MACT.

The insurer denied liability as the policy covered third party while the accident was a single vehicle one, and no other vehicle was involved or any other person injured. The insurer claimed that the insurer who was also the owner of the vehicle was driving and had died in the accident caused by himself. Therefore there can be no third party liability. The trial court also agreed with the tribunal.

The high court observed that one can claim compensation under Section 166 or under Section 163-A of M.V. Act. There can be compensation for the loss caused on account of death or permanent injury. There can be compensation for damage caused to the property. There can be a claim for compensation on account of both the heads. An accident may involve only one vehicle or it may involve more than one vehicle. You may claim compensation from the registered owner only (if vehicle is not insured) or from registered owner and the insurance company. In an accident, there may be loss/damage to the occupants of the vehicle/to the vehicle or there may be loss to persons/property outside the vehicle. Law mandates the owner to obtain insurance policy. It is called as Act Policy. It is a biparty agreement between owner/insured and the company/insurer. So, the insurance company indemnifies the insured to repay if any loss is caused to a third party due to act of insured. Section 146 of M.V. Act mandates the owner to obtain insurance policy before motor vehicle is put to use. So also the insured is free to contract with the insurer to reimburse for the personal loss caused to the occupants of the vehicle. There is a purpose behind mandating to obtain Act Policy. Once you causes an accident thereby causing damage to a third person, the interest of such third person needs to be protected.

But we are concerned with liability of insurance company to reimburse for the loss caused to the insured as per personal accident coverage.  There is a controversy raised who is a 'third party'. It is not defined. In common parlance, a party other than insurer and insured is called third party. Question is always raised whether registered owner can be said to be a 'third party'. This question is no more res-integra. 

Disagreeing with the judgments of the Karnataka and Madras High Court on similar issues, the Bombay High Court held the provisions of Section 165 of M.V. Act deal with jurisdiction of M.A.C.T. When certain conditions are fulfilled, it gets jurisdiction. They are :-

a) Claim for compensation in respect of accidents.

b) Arising out of use of motor vehicle.

If these conditions are fulfilled, M.A.C.T gets jurisdiction. The consequences of accident may be death or bodily injury (two persons) or damage to any property of third party.

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