HC holds vehicle insurer responsible for accident coverage

In an accident case involving two insurance companies, the Karnataka High Court has fastened the liability on the company that provided the comprehensive policy to the vehicle.

The high court modified the order passed by a Motor Accident Claims Tribunal (Bengaluru), quoting provisions under the Registration of Motor Vehicles (Trade Certificate) Rules 1989 that the holders of a trade certificate insurance cannot use the vehicle in public place and cannot sell the vehicle without registration.

A pedestrian was killed in an accident on January 6, 2014 when the car was on a speed test drive after servicing. The car was comprehensively covered by Bharati Axa General Insurance Company, while it was also covered by the trade certificate insurance by the National Insurance Company. The trade certificate insurance (trade plate registration) is used for vehicles in the temporary possession of a dealer for testing and trialing, among others.

Bharati Axa Company had argued before the tribunal that the vehicle was used for a test drive at the time of the accident. It also contended that the vehicle was driven by a staff of the service centre and hence, the liability is on the company which issued the trade certificate insurance.

The Motor Accident Claims Tribunal had allowed the claim filed by the wife of the victim and fixed the liability on the service centre (Tafe Access Ltd), trade certificate insurance holder and National Insurance Company. The tribunal directed them to pay a compensation of Rs 19.30 lakh with interest.

Fastening the liability on Bharati Axa General Insurance Company and the owner of the vehicle, a division bench comprising Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi said that the liability of the insurer is statutory and they are bound to honour the award made against the insured.

The bench also observed that in case of death or bodily injury, the insured at the time of the accident will not be covered under the trade certificate insurance. Observing that the award of Rs 19.30 lakh compensation was on the lower side, the bench enhanced it to Rs 23.38 lakh with interest.