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Insurance company not liable for extra passengers

Supreme Court has ruled out insurance company’s liability to compensate for passengers over the legally permitted limit, in case of an accident.

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Last Updated - May 24, 2023
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Supreme Court has ruled out insurance company’s liability to compensate for passengers over the legally permitted limit, in case of an accident.

In an accident case dated August 18, 2004, a jeep fell in a ditch resulting in the death of 7 passengers and injury caused to 7 other people. Thereafter, a request was made for settlement of the claim by the aggrieved party. The claim company United India Insurance Company filed an appeal in the court.

The insurance policy of the policyholder covered 6 occupants including the driver. The apex court, in its judgement, agreed with United India Insurance stating, ‘The liability of the insurance is confined to the number of people covered by the insurance policy.’ The court observed that in this case, the policy does not cover the larger number of passengers travelling in the vehicle. The remaining passengers would have to be considered as third parties and the insurance company is not liable to compensate for their losses. The liability of these passengers should rest on the owner of the vehicle and the compensation should be provided by the owner.

A bench comprising of Justice Cyriac Joseph and Altamas Kabir pronounced the verdict while disposing the appeal filed by United India Insurance Company. The court has directed the insurance company to recover the balance amount of compensation from the owner of the vehicle.

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Deepak Yohannan is the Founder & CEO of MyInsuranceClub. He enjoys writing on Personal Finance and focusses on explaining the basic concepts of insurance in simple language.