Madras HC Holds Bundled Two-Wheeler Policy Covered Pillion Rider Claim

Owners of two-wheelers holding a bundled motor insurance policy may not be able to avoid liability for injuries or death of a pillion rider merely because the insurer describes the policy as an Act Only cover. The Madras High Court has held that the wording of a bundled policy must be examined before an insurer can deny a claim.

The ruling came in an appeal filed by ICICI Lombard General Insurance Company against an award passed by the Motor Accident Claims Tribunal. The case involved the death of a pillion rider in a road accident in November 2020 near Thirubuvanam on the Madurai–Ramanathapuram Highway.

The deceased was travelling as a pillion rider on a two-wheeler when the vehicle allegedly hit a reflector board. His legal heirs sought compensation of Rs 30 lakh. The tribunal had directed the insurer to pay the compensation and recover the amount from the vehicle owner.

Insurer Cannot Shift Liability

The insurer argued that the policy, though described as a bundled two-wheeler policy, was effectively an Act Only policy and did not provide cover for the pillion rider. It contended that the vehicle owner should be held responsible for paying compensation, according to a recent report by Verdictum.

However, the court examined the policy schedule and its third-party liability provisions. It found that the policy included cover for death or bodily injury to persons, including occupants travelling in the insured vehicle, subject to the terms and conditions of the contract.

“A two-wheeler bundled policy also covers payment of compensation to the occupants in the two-wheeler, including the pillion rider. Therefore, the insurance company cannot escape their liability by contending that the policy does not cover the pillion rider,” says Justice K Rajasekar of the Madras High Court.

The court noted that the third-party insurance cover was valid for five years and the accident occurred during the policy period. It also found that the insurer had collected the premium for the bundled cover.

The court set aside the tribunal’s pay-and-recover direction and held that the insurer itself would be liable to deposit the compensation awarded to the deceased rider’s legal heirs. The insurer was directed to deposit the award amount, along with interest and costs, within six weeks.

What Policyholders Should Check

The ruling highlights why two-wheeler owners should not rely only on the label of their insurance policy. A policy schedule may contain separate provisions for own damage and third-party liability, with the latter extending over a longer period in bundled plans.

“In cases of death or bodily injury to persons, including occupants travelling in the insured vehicle, compensation for their injuries or death would be borne by the insurance companies, subject to the limits of liability,” says the Madras High Court judge.

For policyholders, the key is to preserve the full policy document and not just the premium receipt. They should check whether the policy is a bundled two-wheeler cover, the duration of third-party insurance, and the wording under the liability section.

In the event of an accident, the vehicle owner or claimant should retain the policy schedule, first information report (FIR), hospital records, post-mortem report, driving licence and registration certificate. These documents can become important if an insurer disputes liability at the claims stage.

FAQs

1. Does a bundled two-wheeler policy cover a pillion rider?

It can, depending on the policy wording. The Madras High Court held that a bundled policy’s third-party section may cover injury or death of a pillion rider.

2. Can an insurer deny a pillion rider claim by calling the cover an Act Only policy?

Not automatically. The insurer must examine the complete policy schedule, including third-party liability clauses and the period for which such cover remains valid.

3. What documents should be kept after a two-wheeler accident?

Keep the full policy document, FIR, driving licence, registration certificate, hospital records and, in fatal cases, the post-mortem report and death certificate.