The coverage of risk under a policy will continue, unless the intimation regarding an offending vehicle’s insurance policy reaches its owner, according to a recent judgment by the Karnataka High Court.
The case harks back to July 2007, when a car belonging to a person named P Yadava Rao, a businessman, was damaged after it was hit by a truck. Rao moved to the motor accident claims tribunal, claiming that he had spent Rs 3 lakh on repairing the car and was seeking compensation.
On July 28, 2018, he was awarded Rs 45,000 with six per cent interest as compensation, payable by the truck owner. The insurance company was not liable to pay on the grounds that it had cancelled the insurance policy, as the cheque issued for premium payment was dishonored.
Challenging the same, Rao approached the Karnataka High Court.
After examining the materials on record, the court noted that the under the Insurance Regulatory and Development Authority (Manner of Receipt of Premium (Irdai) (Manner of Receipt of Premium) Regulations, 2002, the commencement of risk under an insurance policy starts just after the cheque is handed over to the insurance company. In case the cheque is dishonoured, the risk continues till the time the owner receives intimation that the policy is cancelled.
It was observed that it was he responsibility of the insurer to inform the vehicle owner about the cancellation of the policy through post. However, though there was a certificate of posting that the insurer had issued an intimation to the truck owner, there was no proof that the latter had received any such intimation.
The judge held that ICICI Lombard General Insurance Company, the insurer of the truck in question, had to pay the compensation, instead of the truck owner as initially directed.
The claimant is thus entitled to a total compensation of almost Rs 1.2 lakh with interest of six per cent per annum, from the date of the petition to the time it was realised, the court noted.
