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(..7..)
General Insurance Contract
QUESTION BANK
Q.1. What are the salient features of the General Insurance Act, 1972?
Q.2. What is the third-party claim? Explain the procedure for an own damages claim.
Q.3. What is an own damage claim? Explain the legal aspects of motor insurance claims.
Q.4. Write a detailed note on ‘Legal aspects of motor insurance claims’ and ‘own damages
claims’.
Short Notes
1. General Insurance.
2. No Fault liability.
3. Third-party or compulsory insurance of Motor Vehicles.
4. Public liability insurance.
5. Absolute or No-Fault liability.
A general insurance contract, also known as a ‘non-life insurance contract’, is a
legally binding agreement between an insurance company (insurer) and an individual or
business (insured) that provides financial protection against a variety of risks, such as
property damage, liability (including motor vehicle accidents), and business interruption.
In exchange for a premium paid by the insured, the insurer agrees to compensate the insured
for losses incurred due to covered events.
II. Important Components of a General Insurance Contract:-
1. Parties:
The two main parties involved in a general insurance contract are the insurer and
the insured. The insurer is the company that provides the insurance coverage, while the
insured is the individual or business that purchases the coverage.
2. Subject Matter:
A general insurance contract covers the specific property, liability, or business
interruption being insured. The contract clearly defines the scope of coverage and the
specific perils covered.
3. Policy Period:
1 Also topic no. 5 i.e Life Insurance Contracts.
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The policy period is the duration of time during which the insurance coverage is in
effect. The contract will specify the policy's start and end dates.
4. Premium:
The premium is the amount of money the insured pays the insurer in exchange for
insurance coverage. It is typically calculated based on factors such as the risk of loss, the
insured's property or liability value, and the insured's claims history.
5. Policy Limits:
Policy limits represent the maximum amount that the insurer will pay for a covered
loss. The contract will specify the policy limits for each type of coverage.
6. Exclusions:
Exclusions are specific events or circumstances that are not covered under the
insurance policy. The contract will clearly outline the exclusions so that the insured is
aware of what is not covered.
7. Duties of the Insured:
The insured has certain duties under the general insurance contract, such as
providing accurate information to the insurer, taking reasonable steps to prevent losses,
and promptly reporting any claims.
8. Duties of the Insurer:
The insurer's primary duty is to provide financial compensation to the insured for
covered losses. The insurer must also act in good faith and handle claims promptly and
fairly.
9. Claim Process:
The claim process outlines the steps that the insured must take to report a loss and
seek compensation from the insurer. The contract will typically specify the time limits for
filing a claim and the documentation required.
10. Cancellation and Termination:
The contract will specify the conditions under which either the insured or the insurer
can cancel or terminate the policy.
III. Types of General Insurance:-
General insurance is a type of insurance policy that covers the financial loss suffered
due to the loss or destruction of the insured asset. It covers home, vehicle, travel, health
(non-life assets), etc., from fire, floods, accidents, man-made disasters, theft, etc. Many
types of general insurance policies are available in the market, each covering a different
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type of risk.
A. Common types of general insurance policies: -
Some of the most common types of general insurance policies in India are:
1. Health Insurance:
This type of insurance covers the expenses incurred due to any illness or medical
etc.
2. Motor Insurance:
This type of insurance is mandatory in India for vehicles. It covers the financial
Vehicle Act of 1988 deals in detail with this type of insurance.
3. Travel Insurance-
This type of insurance covers the financial loss suffered due to any unexpected
events that may occur during your travel, such as trip cancellation, medical emergencies,
4. Property Insurance-
This type of insurance covers the financial loss suffered due to damage to the property
caused by natural calamities, fire, theft, etc.
5. Commercial Insurance-
The insurance covers the financial loss suffered due to damage to your commercial
property, liability claims, employee-related risks, etc.
6. Asset Insurance:-
This type of insurance covers the financial loss suffered due to damage to our valuable
assets, such as jewelry, art, antiques, etc.
7. Pet Insurance:-
This type of insurance covers the financial loss suffered due to medical expenses incurred
for pets.
8. Bite-size Insurance:-
2 https://www.godigit.com/guides/types-of-general-insurance
3 https://www.godigit.com/guides/types-of-general-insurance
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This type of insurance provides coverage for small risks such as mobile phone damage,
B. Broader types of General Insurance: -
The above general types of insurance can broadly be divided into ‘Public Liability
Insurance’ and ‘own damage insurance’. The above categories can fall into either of the
following broader types of insurance.
a. Meaning:-
Public liability insurance protects businesses from claims of accidents, bodily
injuries or property damage that can come up when working with the general public or
third parties during their operations. It essentially protects businesses from financial losses
due to unintentional harm caused to others. Such insurance is not directly covered under
any specific law but by the law of contract between the insurance and the insured, Specific
Industrial Laws, Tort law or Motor Vehicles Act, 1988, The Public Liability Insurance Act
1991, etc.
The Public Liability Insurance Act 1991 is an Indian legislation that applies to all
owners associated with the production or handling of any hazardous chemicals. The act
b. Important features of public liability insurance:-
The following are the important features of public liability insurance.
i. Who is covered?
(i) It covers your business, not individual employees.
4 https://www.godigit.com/guides/types-of-general-insurance
5 https://www.thehartford.com/general-liability-insurance/public-liability-
6 Overview of Public Liability Insurance Act, 1991 - iPleaders
7 Public Liability Insurance | The Official Website of Ministry of Environment, Forest and Climate Change,
8 The Public Liability Insurance Act, 1991 (policybazaar.com)
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(ii)It extends coverage to third parties (including customers, visitors, and members
of the public) who suffer injury or property damage on your premises or as a result of your
business activities.
ii. What is covered?
(i) Accidental bodily injuries to third parties on your premises or due to your
operations.
(ii) Accidental damage to third-party property caused by your business activities or
employees.
(ii) Legal costs associated with defending yourself against claims of injury or
property damage.
iii. What is not covered?
(i) Intentional acts of your business or employees.
(ii) Employee injuries (covered by workers' compensation insurance).
(iii) Product liability (covered by separate product liability insurance).
iv. Benefits of public liability insurance:
(i) Provides financial protection against potentially costly lawsuits.
(ii) Protects your business's reputation and goodwill.
(iii) Gives you peace of mind knowing you're not personally liable for unintentional
harm caused to others.
v. Examples of situations where public liability insurance might be needed:
(1) A customer slips and falls on a wet floor in your shop, sustaining injuries.
(2) A delivery truck from your business accidentally crashes into a pedestrian's car,
causing damage.
(3) A product you sell malfunctions and causes property damage to a customer's
home.
In conclusion, public liability insurance is a crucial investment for any business that
interacts with the general public. It provides valuable financial protection and peace of
mind, allowing you to focus on running your business without worrying about unforeseen
accidents or injuries.
c. Own Damage Claims:-
1. Meaning:-
‘Own damage claims’ is one type of general insurance like public insurance. In the
context of insurance, an ‘Own Damages Claim’ refers to a claim filed by a policyholder
for damage to his own insured property, typically a vehicle or house. This type of claim is
covered under sections of insurance policy specific to "own damage" or "comprehensive
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coverage," depending on the type of insurance. The base of such coverage is the contract
of insurance entered into between the insured and the insurer.
2. Features of ‘Own Damage Claims”:-
Some important features of Own Damage Claims or policies:-
a. What is covered:-
The following types of own damages are covered by different types of insurance
policies:-
i. Damage to insured property caused by:
ii. Accidents (collisions, crashes, rollovers)
iii. Theft or attempted theft
iv. Natural disasters (floods, earthquakes, storms)
v. Fire or lightning
vi. Vandalism or malicious acts
vii. Riots or civil unrest
viii. Any unforeseen event as per the policy wording
b. What is not covered:-
The insurance does not cover the following risks, viz.
i. Wear and tear
ii. Mechanical breakdowns
iii. Faulty repairs from previous accidents
iv. Intentional damage by the policyholder or anyone with their consent.
v. Exclusions as per the specific policy terms
c. Claim process:-
To get the agreed compensation for damage caused by above mentioned causes, the
claimant has to follow the following steps:-
i. Reporting the damage to the insurance company as soon as possible.
ii. Providing supporting documentation, such as repair estimates, police reports (if
applicable), and photos of the damage.
iii. Cooperating with the insurance company's investigation process may involve
inspections and assessments.
If approved, the insurance company will either pay for repairs or reimburse for the
repair cost up to the damaged property's insured value.
d. Benefits of Own Damages Claims:-
The insured gets the following benefits-
i. Financial protection from unexpected repair costs due to damage to the property.
ii. Peace of mind knowing that the valuable assets are insured.
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iii. Faster repairs and replacements compared to relying on personal savings.
IV. Significance of a General Insurance Contract:-
General insurance contracts play a vital role in protecting individuals and businesses
from financial losses arising from unforeseen events. They provide peace of mind and
financial stability in the face of potential losses, enabling individuals and businesses to
focus on their activities without worrying about financial ruin.
V. The Motor Vehicles Act, 1988–
A. INTRODUCTION-
Liability arising out of a motor accident falls originally under ‘tort’. However, the
provisions relating to liability arising out of motor vehicle accidents were codified for the
first time by the Motor Vehicles Act of 1939. The Motor Vehicles Act of 1988 replaced
the earlier Act of 1939. The present Act of 1988 contains XIV Chapters and 217 Sections.
It has two Schedules. The Act makes insurance compulsory for every vehicle.
Chapters X to XII and Schedule Second are very important for the sake of study
herein. However, considering the syllabus and practicable applicability of the Act, we will
restrict our discussion to these provisions.
Chapter X from Ss. 140 to 144 deal with ‘Liability without fault’ in certain cases.
Chapter XI from Ss. 145 to 164 deals with ‘insurance of motor vehicle against third party
risks’ and Chapter XII from Ss. 165 to 176 deals with ‘Claim Tribunals’. The Second
Schedule provides for a ‘structural formula’ to be used while computing payment of
compensation under S. 163 A to the victim. However, the 2019 amendment in the Motor
Vehicles Act, 1988 has removed Chapter X and the sections relating thereto, i.e. S. 140 to
S. 144 (the remedy of no-fault liability). Similarly, the remedy of compensation under S.
However, Chapter XI (S. 145 to S. 164) has been substituted with the new sections, i.e.,
Ss. 145 to 164 D (We have discussed the new provisions, comparing them with the old
when necessary).
In modern times, the number of vehicles has increased enormously, and so have
accidents. Many people either die or suffer injuries in accidents. The abovementioned
provisions are incorporated in the Motor Vehicle Act to provide compensation relief to
accident victims. We will discuss these provisions one by one.
B. Insurance of Motor Vehicles against third party Risks (Chapter XI Ss. 145 to
9 The Motor Vehicles Amendment Act, 2019 came into effect on 1st September 2019 it replaced
many important provisions of the motor vechicles Act, 1988. However some of the important
provisions relating to no-fault liability under Ch. X and those relating to Compensation under
Ch. XI came into force later on 1st April 2022.
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S. 164 D):-
The topic deals with the provisions relating to compulsory third-party insurance for all
vehicles. It also contains provisions for “insurance of Motor Vehicles against Third-Party Risks”.
1. INSURANCE OF MOTOR VEHICLE IS COMPULSORY (S. 146)-
The Motor Vehicle Act makes motor vehicle insurance compulsory. S. 146
provides that the owner of every motor vehicle is bound to insure his vehicle against third-
party risk. It further provides that no person shall use a motor vehicle except as a passenger
or cause or allow any other person to use a motor vehicle in a public place unless the vehicle
is insured.
However, a driver merely as a paid employee who does not know the absence of
policy is not said to have acted in contravention of the provisions of this Act.
Similarly, the appropriate Government may, by order, exempt from the operation of
third-party insurance to any vehicle owned by any of the following authorities viz-
(i) the Central Government or Government's vehicle, used for Government purposes
connected with any commercial enterprise.
(ii) any local authority.
(iii) any State Transport undertaking (within the meaning of S. 68 of the Act).
Provided that no such orders shall be made in relation to any such authority unless
a fund has been established and is maintained by that authority in accordance with the rules
made on that behalf under this Act for meeting any liability arising out of the use of any
vehicle of that authority which that authority or any person in its employment may incur to
third parties.
The object of the provision is to protect the third party's interest.
The meaning of ‘third party’-
An insurer is treated as the first party, and the policyholder is treated as the second
party to the insurance contract. Other parties than the above two, to which damage, injury,
or death is caused, are called 'third party'. The government is the third party according to
the Act.
2. REQUIREMENTS OF POLICY AND LIMITS OF LIABILITY (S. 147)-
The first part of S. 147 lays down the requirements of insurance policies, viz-
(i) policy must be insured by a person who is an authorized insurer, and
(ii) person or classes of persons mentioned in the policy must be insured against any
liability which may be incurred by him in respect of the death or bodily injury to any
person, including the owner of the goods or his authorized representative carried in the
vehicle or damage to any property of third party caused by or arising out of the use of the
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vehicle in a public place, and
(iii) person or class of persons mentioned in the policy against the death of 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.
(iv) Policy shall not be required to cover liability in respect of death or injury to any
employee of insured arising out of and in the course of his employment; such employees
are-
(a) for death or personal injury to a third party, the whole amount of liability incurred.
(b) for damage to the property of a third party, the liability is limited to Rs. 6000 (six
thousand).
Thus, there is no limit on liability for death and personal injury to a third person.
Still, regarding damage to property, the liability is limited to Rs. 6000.
An insurer is liable to satisfy any judgment or award passed against the person
covered by the policy and to pay the amount along with the cost and interest if awarded on
the principal amount.
However, it is essential to make the insurer party to the claim, and the opportunity
to defend is to be given to it. The insurer can defend the claim for breach of policy on any
of the following grounds-
(a) If the vehicle is used for hire or reward, which is not covered in a contract of insurance.
(b) if a vehicle is used for organised racing and speed testing, which is not covered in a
contract of insurance.
(c) if a vehicle is used for a purpose not allowed by the permit if a vehicle is a transport
vehicle.
(d) if a vehicle is used without a sidecar being attached where the vehicle is a motorcycle;
or
(e) if the driver had no valid license at the time of the accident.
(f) if the injury is caused or contributed due to war, riot, or civil commotion,
(g) if a policy was obtained by non-disclosure of a material fact or by false representation
of fact.
4. SPECIAL PROVISION FOR COMPENSATION IN CASE OF HIT-AND-RUN MOTOR
ACCIDENT (S. 161)-
“Hit and run accident” means “an accident arising out of the use of a motor vehicle or
motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts of
10 The Provision was contained in S. 149 of earlier Act, i.e. before amendment in 2019.
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the purpose" (S. 161 (b)).
There is a special provision for compensation in such hit-and-run cases. The section
provides that the general Insurance Corporation and the insurance companies, for the time
being, carrying on general insurance business in India shall provide for compensation in
respect of the death of or grievous hurt to persons resulting from hit-and-run motor
accidents.
The compensation to be paid in such hit-and-run cases shall be-
thousand five hundred only).
However, if a person receives compensation or other amounts subsequent to
receiving the above-mentioned amount under other provisions of this Act or under
provisions of any other law, the amount received under this section shall be returned back
to the payee-insurer (S. 162).
S.164 B empowers the Central Government to constitute a Motor Vehicles Accident
Fund for the treatment and compensation in hit-and-run cases.
Framing scheme for payment of compensation in cases of hit and run motor
accident (S. 164 A)-
The section empowers Central Government by notification in the official Gazette to
make a scheme specifying the manner in which the scheme shall be administered by the
General Insurance Corporation, the form, manner and time within which application for
compensation may be made, the officers or authorities to whom such application may be
made, and the procedure to be followed by such officers or authorities for considering and
passing orders on such applications and all other matters connected with, or incidental to
the administration of the scheme and the payment of compensation.
5. Compensation on the basis of “No Fault Liability” (S. 164)-
The Amendment Act. 2019 replaces the provision contained under S. 163 A of
earlier with S. 164 of the present Act with increased compensation.
According to S. 164, the owner of the motor vehicle or the authorised insurer shall
be liable to pay to the legal heirs or the victim, as the case may be, compensation due to
any accident arising out of the use of a motor vehicle. In the case of death, a sum of Rs.
Five lakh and in the case of a grievous hurt, a sum of Rs. Two lac fifty thousand, as the
case may be.
11 Before amendment in 2019 the amount was 50,000/-
12 Before the amendment in 2019 the amount was 12500/-
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In any of the above claims, the claimant shall be required to plead or establish that
the death or grievous hurt in respect of which the claim has been made was due to any
wrongful act or neglect or default of the owner of the vehicle or of the vehicle concerned
or of any other person.
However, suppose a person receives compensation or other amounts subsequent to
receiving the above-mentioned amount under provisions of any other law. In that case, the
amount received under this section shall be reduced from the amount of compensation
payable under this section.
The amendment abolished the II Schedule, which provided compensation under S.
163 A according to a structured formula. The section fixed the sums that varied under the
earlier S. 163 A structured compensation formula.
Moreover, it is not an interim amount as it used to be under S. 140 of the earlier Act,
wherein the persons used to get Rs. 50,000 on death and Rs. 25000/—in case of grievous
injuries as interim compensation. In present law, a claimant can either apply under S. 166
or S. 164 but not simultaneously under both.
6. 'Motor Accident Claims Tribunals:-
The Motor Vehicle Act created a new forum, 'Motor Accident Claims Tribunals',
which is, for brevity, known as 'Clams Tribunal.' The Act barred the jurisdiction of Civil
Courts from hearing accident claims.
1. SETTING OF ‘CLAIMS TRIBUNALS’ (S. 165)-
S. 165 lays down that the state government may constitute a claims tribunal for the
area to adjudicate claims for compensation for death or injury to a third person or damage
to property arising out of the use of motor vehicles.
Constitution of Claims Tribunals and qualification of members (S. 165 (2))-
A Claims Tribunal shall consist of members the State Government may think fit to
appoint, and where it consists of two or more members, one shall be appointed as a
Chairman thereof. The section further lays down the qualifications required of a person to
be appointed as a member. It provides that a member must be
(a) a Judge of a High Court, or
(b) a District Judge, or
(c) is qualified for appointment as a High Court Judge.
Where there are two or more Claims Tribunals constituted for any specific area, the
State Government may, by order, regulate the distribution of business among them.
2. APPLICATION FOR COMPENSATION (S. 166)-
The section provides for the form of application for compensation and the persons
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who may claim compensation-
a) Persons who can apply for compensation-
According to the section, an application for compensation arising out of an accident
may be made-
(i) by the person who has sustained the injury, or
(ii) by the owner of the property, or
(iii) where death has resulted from the accident by all or any of the legal representatives of
the deceased or
(iv) by any agent duly authorized by the person injured or all or any of the legal
representatives of the deceased, but if all the legal representatives of the deceased have not
joined as applications, the application shall be made on behalf of or for the benefit of all
the legal representatives of the deceased and the legal representative who have not so
joined, shall be impleaded as respondents to the application.
Thus, this part mentions the person who can apply for compensation.
b) Which Tribunal can hear the application? / Jurisdiction of Tribunal-
Every application for compensation shall be made at the option of the claimant-
(i) either to the Claims Tribunal having jurisdiction over the area in which the accident
occurred, or
(ii) to the Claims Tribunal within the local limits of whose jurisdiction the claimant resides,
or carries on business, or
(iii) within the limits of whose jurisdiction the defendant resides.
The application shall be in such form and contain such particulars as may be
prescribed. If applicants have not made a claim under S. 140 along with the application
under this section, the application must contain a separate statement to that effect.
The Claims Tribunal may treat a report of an accident by police under S. 159 as an
application for compensation.
c) Limitation for making a compensation claim (S. 166 (3)-
This sub-section has introduced a period of limitation of six months from the
occurrence of the accident for filing an application for compensation. Before this
amendment, there was no limitation period for filing a claim application.
d) Legal representatives of the injured are entitled to pursue the claim after
the death of the injured (S. 166 (5))-
This sub-section empowers the legal representatives of the injured to continue the
claim after the death of the injured, irrespective of whether the cause of death is readable
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or has a nexus to the injury. Earlier, the injury claim would die on the death of the injured
claimant, and the legal heirs had no right to continue the claim.
S. 173 (2) prohibits the appeal against the award of the Claim Tribunal if the amount
awarded is less than Rs. 1 lakh. In other words, no appeal would be made if the awarded
amount is less than Rs. 1 lakh.
3) OPTION REGARDING CLAIMING COMPENSATION (S. 167)-
Where death or bodily injury to any person gives rise to a claim for compensation
under this Act and also under the Workmen's Compensation Act, 1923, the person entitled
to compensation may claim compensation under either of these two Acts and not under
both.
Thus, the section directs the application to elect between the abovementioned
remedies if he can claim either the provisions of the Motor Vehicle Act or the Workmen's
Compensation Act.
4) PROCEDURE, POWER, AND AWARD OF THE CLAIMS TRIBUNAL (Ss. 168, 169,
170)-
a) Procedure of Claims Tribunal (S. 168 and 169)-
On receipt of an application for compensation (made under S. 166), the Claim
Tribunal shall-
(i) after giving notice of the application to the insurer, and
(ii) after giving the parties (including the insurer) an opportunity to be heard,
(iii) hold an inquiry into the claim-
(a) In holding an inquiry, the Tribunal may follow the rules made or follow a
summary procedure as it thinks fit.
(b) for holding an inquiry, the Claims Tribunal shall have all the powers of the Civil
Court.
(c) for adjudication, the Tribunal may choose one or more experts to assist it in
holding an inquiry.
(iv) where in the course of any inquiry, the Claims Tribunal is satisfied that-
(a) there is collusion between the person making a claim and the person against
whom the claim is made, or
(b) the person against whom the claim is made has failed to contest the claim; it
may, for the reasons to be recorded in writing, direct that the insurer who may
be liable in respect of such claim shall be impleaded as a party to the proceeding.
The insurer then can contest the claim on all or any of the grounds available to
the person against whom the claim has been made (S. 170).
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b) Award of Claims Tribunal (Ss. 168, 171, 172)-
After the inquiry is completed, the Claims Tribunal makes an award and determines
the amount of compensation that appears to be just. It further specifies the persons to whom
compensation is to be paid and the persons by whom the compensation is to be paid, i.e.,
the insurer, owner, or driver of the vehicle, or by all or any of them.
The Claims Tribunal shall arrange to deliver copies of the award to the parties
concerned expeditiously and, in any case, within fifteen days from the date of the award.
When an award is made, the person who is required to pay any amount in terms of
the award shall deposit the entire amount awarded in such a manner as the Tribunal may
direct within thirty days from the date of the announcement.
The Tribunal may direct that in addition to the amount of compensation, simple
interest shall also be paid at such rate and from such date (not before filing the application)
as it thinks fit (S. 171).
The Tribunal may award compensatory costs where it is found that there is
misrepresentation in the case or defence or the claim or defence is vexatious (S. 172).
C. Provisions omitted from the Motor Vehicles Act, 1988 relating to
compensation but are discussed for the purpose of knowledge and syllabus:-
1. LIABILITY WITHOUT FAULT IN CERTAIN CASES (Ss. 140 TO 144).
No fault liability in certain cases (S. 140)-
Where the death or permanent disablement of any person results from an accident
arising out of the use of a motor vehicle (or motor vehicles), the owners of the vehicles
shall be jointly and severally liable to pay compensation in respect of such death or
disablement in accordance with the provisions of this Act (S. 140 (1)).
The liability under this section is called 'no fault' because the claimant for
compensation need not prove that the accident occurred due to any wrongful act, neglect,
or default of the driver of the vehicle. He is entitled to the amount even though he himself
was negligent in causing the accident. The liability is fixed without proof of fault (Cl. 3
and 4 of S. 140).
The section has fixed the amount for no-fault liability. In case of death of any person
in an accident, claimants are entitled to Rs. 50,000 (Fifty thousand only), and in case of
permanent disablement, the person injured is entitled to Rs. 25000 (twenty-five thousand).
The vehicle owner involved in the accident is liable to pay the amount (S. 140 (2).
The remedy for 'no fault liability' is speedy, and the claimant only has to prove that
the person died or became disabled in an accident for which compensation is claimed.
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(i) Definition of permanent disablement (S. 142)-
The definition of ‘permanent disablement’ is given under S. 142. It defines ‘for this
chapter permanent disablement of a person shall be deemed to have resulted from the
accident of the nature referred to in sub-section (1) of S. 140 if such person has suffered by
reason of the accident any 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 impairment of the powers of any member or joint; or
(c) permanent disfiguration of the head or face.
Thus, the section defines permanent disablement as a requisite under S. 140 (1) for
'no fault liability'. The point to be noted here is that the definition does not mention the
minimum percentage of disability requisite to grant a no-fault amount. In other words, any
percentage of permanent disability attracts liability under S. 140 (1).
(ii) The right to claim compensation for ‘no fault’ is in addition (S. 141)-
The right to claim compensation for 'no fault liability' under S. 140 (1) is in addition
to any other right to claim compensation mentioned under this Act or any other law. In
other words, a victim can claim compensation under the provisions of this or other laws.
Compensation for no-fault liability is no bar to claiming compensation according to the
other provisions of this or other Acts. However, when the compensation is claimed under
other provisions of this Act or provisions of any other law, the amount granted for 'no fault'
liability shall be reduced from the amount so granted (S. 140 proviso to Cl. 5).
However, if the amount subsequently awarded is less than Rs. 50,000 (fifty
thousand), Clement is not entitled to any additional amount because Rs. 50,000 (fifty
thousand) has already been paid for no fault under S. 140 (1).
(iii) The principle of ‘no fault’ liability also applies to claims under the
Workmen’s Compensation Act (S. 143)-
According to S. 143, the provision of no-fault liability under S. 140 (1) is also
applicable to the claims under the Workmen's Compensation Act. 1923.
(iv) Overriding effect of the Chapter (S. 144)-
S. 144 provides that the provisions of this chapter, i.e., Chapter X, shall have an
effect notwithstanding anything contained in any other provisions of this Act or any other
law for the time being in force.
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In other words, provisions under this chapter, i.e., provisions relating to 'no fault'
liability and the amount mentioned therein, would not be affected/ barred by any provision
under this Act or any other law.
2. SPECIAL PROVISIONS AS TO PAYMENT OF COMPENSATION ON STRUCTURED
FORMULA BASIS (S. 163 A)-
The section was inserted in 1994 by the amendment to the Act. The section awards
compensation on a 'no fault liability Basis’ as an alternative to a claim under S. 140.
S. 163 (A) (1) provides that ‘Notwithstanding anything contained in this Act or any
other law for the time being in force or instrument having the force of law, the owner of
the motor vehicle or the authorised insurer shall be liable to disablement due to accident
arising out of the use of motor vehicle, compensation as indicated in the second schedule
to the legal heirs or the victim as the case may be.
It further lays down in clause (2) that in any claim of compensation mentioned
above, the claimant shall not 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 of the vehicle or the vehicles concerned or of any other
person.
Clause (3) states that the Central Government may amend the second schedule from
time to time, by notification in the official Gazette, keeping in view the cost of living.
Where a person is entitled to claim compensation under S. 140 and S. 163 A, he
shall file the claim under either of the said sections and not under both (S. 163 B).
SECOND SCHEDULE FOR COMPENSATION FOR THIRD-PARTY FATAL
ACCIDENT/INJURY CASE CLAIMS
1.. Amount of compensation shall not be less than Rs. 50,000.
2. General Damage (in case of death):
The following General Damages shall be payable in addition to the compensation
outlined above: (i) Funeral expenses -Rs. 2,000
(ii) Loss of Consortium if a beneficiary is a spouse -Rs. 5,000
(iii) Loss of Estate -Rs. 2,500
(iv) Medical Expenses-actual expenses incurred before death supported by
bills/vouchers but not exceeding -Rs. 15,000
3. General Damages in Case of Injuries and Disabilities:
(i) Pain and Sufferings-
(a) Grievous injuries -Rs. 5,000
(b) Non-grievous injuries -Rs. 1,000
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“Law Master’s” Publication “General Insurance Contract” Prof. S.D. Bhosale
(ii)Medical Expenses-actual expenses incurred supported by bills/vouchers but not
exceeding onetime payment -Rs. 15,000
4. Disability in non-fatal accidents:
The following compensation shall be payable in case of disability to the victim
arising from non-fatal accidents: -
Loss of income, if any, for the actual period of disablement not exceeding fifty-two
weeks, plus either of the following:-
(a) In case of permanent 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
(b) In case of permanent partial disablement, such a percentage of the compensation
would have been payable in the case of permanent total disablement as under item (a)
above. Injuries deemed to result in Permanent Total Disablement/Permanent Partial
Disablement, and the percentage of loss of earning capacity shall be as per Schedule I under
5. Notional income for compensation to those who had no income prior to the
accident: - Fatal and disability in non-fatal accidents: - (a) non-earning persons -Rs. 15,000
permanent year (b) Spouse -Rs. l/3rd of the income of the earning/surviving spouse. In the
case of other injuries, only "General Damage" is applicable. (See the second schedule on
the next pages).
However, the recent amendment 2019 in The Motor Vehicles Act, 1988 has
removed the remedy under S. 163A and the sections relating thereto. (However, for the
sake of the syllabus, the topic is discussed here.)
Conclusion
General insurance contracts are complex legal documents that govern the relationship
between an insurer and an insured. Understanding the key components and implications of
these contracts is crucial for both policyholders and insurers to ensure that they are
adequately protected and that claims are handled fairly and efficiently.
References-