Chennai:
In a temporary relief to the general insurance indutsry,the Madras High Court on Wednesday has put its order, making bumper-to-bumper cover for new vehicles sold from September 1 mandatory, in abeyance for the time being after General Insurance Council (GI Council), had moved the court last week, seeking some clarifications on the order.
Justice S Vaidyanathan, who had issued earlier verdict on making bumper-to-bumper cover for new vehicles, has adjourned the matter to September 13 when it will hear the matter..
GI Council had sought certain clarifications as well as time from the Madras HC , pointing out the order cannot be implemented from Spt o1 and it is advisable to hear the various interested parties in the matter and the insurance sector regulator the IRDAI.
The council has asked the court to grant the insurance companies 90 days time to effect changes in the computer system after due approval from the insurance regulator.
The Madrs HC also has issued notices to GI Council and the insurance regulator saying they are important parties in the case hence they have been impleaded in the matter.
Earlier, in a significant order, the Madras HCt has ruled that "bumper-to-bumper" insurance should be mandatory whenever a new vehicle is sold, from September 1.
This must be in addition to covering the driver, passengers and owner of the vehicle, for a period of five years.Thereafter, the owner of the vehicle must be cautious in safeguarding the interest of driver, passengers, third parties and himself/herself, so as to avoid unnecessary liability being foisted on the owner of the vehicle, as beyond five years, as on date there is no provision to extend the bumper to bumper policy, due to its non-availability, Justice Vaidyanathan said in an order.
Analysts have pointed out that Madars HC's mandate will most likely increase the acquisition cost of new cars, just ahead of the festive season. it will lead to an increase in the insurance outgo for car owners, depending on its price, by a minimum Rs 50,000 for car and a minimum of Rs 7,000 for two-wheeler owners, an expert had said.
The jMadras HC was allowing a writ petition from the New India Assurance Company Limited in Avalpoondurai, challenging the orders dated December 7, 2019 of the Motor Accidents Claims Tribunal, Special District Court in Erode.
The insurance company pointed out that the insurance policy in question was only an "Act Policy", which would cover only the risk that might be confronted by a third party to the vehicle and not its occupants. The coverage for an occupant of the vehicle could be extended upon payment of additional premium by the owner of the car, the insurance company contended.
The judge passed this order, which would go a long way in coming to the aid of lots of accident victims. He, however, could not come to the rescue of the claimants in this case, as the vehicle, in which their breadwinner was travelling/driving, was covered only with third-party insurance.
Left with no other choice but to deprive the claimants of the accident benefits ordered by the Motor Accidents Claims Tribunal in Erode, the judge quashed the order of the Tribunal awarding a compensation of Rs 14.65 lakh to K Parvathy and three others.
The judge, however, made it clear that this order will not preclude the claimants from claiming compensation for the death of the deceased from the owner of the car, as per the terms of the policy for which the car was insured.
Before parting with this judgment, the judge said that it is saddening to point out that when a vehicle is sold, the purchaser/ buyer is not clearly informed about the terms of policy and its importance. Similarly, at the time of buying the vehicle, the buyer is also not interested in thoroughly understanding the terms and conditions of the policy, as he/ she is more concerned about the vehicle's performance and not about the policy.
When a buyer is ready to pay a huge amount for purchase of a vehicle, it is really shocking as to why he/ she is not interested in spending a paltry sum to take a policy so as to safeguard himself/ herself and others, Justice Vaidyanathan had pronounced..