Enhance accident cover to at least Rs 15 lakh, IRDA told

CHENNAI: The Madras High Court has directed the Insurance Regulatory Development Authority of India ( IRDA) to enhance the compensation under the Compulsory Personal Accident Cover (CPAC) from the existing Rs 1 lakh to at least Rs 15 lakh.

A division bench of Justices R Subbiah and Justice AD Jagadish Chandira gave the direction while allowing an appeal from the United India Insurance Company Limited at Neyveli, on October 26.
The bench pointed out that the policy to compensate the owner of the vehicle by virtue of CPAC had been fixed at Rs one lakh in 2002. The sum might be sufficient to meet the medical expenses to certain extent, then. However, now 15 years had lapsed and the cost of medical treatment had sky-rocketed, the judges pointed out

Due to negligence of the owner of the vehicle, if a third party suffers bodily injury or even death in a road accident, he or his family members will get adequate compensation from the insurance company befitting the pecuniary loss sustained by the injured or on account of the death of the deceased. On the contrary, if the owner of the vehicle himself sustains bodily injury or dies in an accident not involving another motor vehicle, due to his or her own negligence, the owner of the vehicle or his or her family members will not get compensation befitting the actual pecuniary loss of the deceased or injured, but only a lump sum compensation of Rs 1 lakh.

“It is unfortunate that the owner of the vehicle, who pays premium amount for the risks that may be confronted by the third party or due to any other factor, is not getting adequate compensation in the event of his or her death or bodily injury. Therefore, having regard to the above factual matrix, taking note of the escalation in the cost of living, particularly the cost of medical treatment, we direct the IRDA to enhance the Compulsory Personal Accident Cover from the existing Rs one lakh to at least Rs 15 lakh, so that the amount will add some succour or solace to the victims of road accidents, the bench said.

The matter relates to an appeal filed by the insurance company challenging the award of a total compensation of Rs 51.37lakh awarded by Motor Accident Claims Trinunal in Neyveli on April 28, 2015 to the family members of one Rajini, who died in a road accident on June 6, 2011. Rajini was travelling as a pillion on a two-wheeler owned by him and driven by his friend on the Neyveli-Virudachalam Road, near Romapuri liquor shop.

The family members filed a claim petition before the tribunal. The tribunal passed an award of a total compensation of Rs 51.37 lakh, against which the insurance firm filed the present appeal.
It submitted that under Sec.147 of MVA, the risk of the deceased, who is the owner of the vehicle, is not required to be covered by the insurance company and if at all, the claimants/respondents are entitled, it can only be to a maximum amount of Rs one lakh under  CPAC as per the insurance policy and nothing more.

As the court felt the assistance of IRDA was necessary for disposal of the appeal, it impleaded  its officials as a party in the case. The bench, after referring to various judgments of Supreme Court,  held that the insurance company cannot be fastened with any liability under the provisions of MVA for the death of the deceased who himself was the owner of the vehicle and when no other motor vehicle was involved in this case.

Therefore, the question of the insurer being liable to indemnify the deceased/owner of the vehicle does not arise. Since the deceased himself was the owner of the two-wheeler and not a third party, the claim petition filed by the claimants will not come within the purview of Sec. 146 or 147 of MVA for the purpose of payment of compensation. “Therefore, we hold that the impugned judgment and decree of the tribunal cannot be sustained. The appeal filed by the insurance company deserves to be allowed, the bench said.

The judges, before parting with the case, observed that they were pained to note that as per the Indian Motor Tariff, the compensation payable to the legal heirs in case of death or bodily injury suffered by the owner of the vehicle is restricted to Rs one lakh only in case of two-wheeler and Rs two lakh in case of four wheeler, by virtue of CPAC. It is outdated, the bench said and directed IRDA to enhance it to Rs 15 lakh after consultation with all stakeholders within six months.