Road to Hell for Pillion Riders/Gratuitous Occupants is Paved with Good Intentions              Narasimhan Vijayaraghavan                             

Road to Hell for Pillion Riders/Gratuitous Occupants is Paved with Good Intentions

Narasimhan Vijayaraghavan




There is a very serious Life and Death  issue, which has raised its ugly head,in 2021 & 2022, impacting the stakeholders-  as innocent motor accidents victims,vehicle owners, drivers and insurance companies,pursuant to the 20th July,2018, Supreme Court mandate on long term motor insurance policies for new motor vehicles viz.five years for two wheelers and three years for the rest.


It may be for the Insurance Regulatory & Development Authority, to sort it out, by nipping it in the bud,lest it adds to the pendency pandemic in courts of law. Or the Supreme Court to provide the practical solution. And earlier  one or the other or both intervene,   better it would be for  physical and financial health of the stakeholders, particularly,  the innocent accident victims. Let me explain.


In 2015, there were about five lakh road accidents in India, which killed about 1.5 lakh people and injured about five lakh people. There was ‘a death every six hours on the roads’. Between 2014-2029, there were  2,363,031  road accidents, as per National Crime Records Bureau statistics. India, as a signatory to the Brasilia declaration, intends  to reduce road accidents and traffic fatalities by 50% by 2022.  Are we there?


According to Indian Automobile Industry Report, Nov,2021, in 2020, India was the fifth-largest auto market, with ~3.49 million units combined sold in the passenger and commercial vehicles categories. It was the seventh-largest manufacturer of commercial vehicles in 2019. However, the total vehicle registrations  in India fell by 29.85 per cent to 1,52,71,519 units in financial year 2020-21; the lowest in the last eight years,the Federation of Automobile Dealers Association (FADA) said on 5th May,2021.  India Registered Motor Vehicles: Total data was reported at 295,772.000 Units  in 2019. This recorded an increase from the previous number of 272,587.000 Units  for 2018. This is the backdrop for our consideration.


Insurance regulator IRDAI clarified that the long-term motor insurance products it had permitted general insurers to offer while implementing the Supreme Court’s directions in July,2017, applied only to new private cars and new two-wheelers. “These products shall not be offered for renewal of existing policies or for old vehicles,” new Member (Non-life) T.L. Alamelu, said in a circular on 11th July,2019.


There are far too many accidents and claims. The policies in question, long term,  are all Package or Comprehensive in nature. As per IRDA circular dt.16.11.2009, the Package Insurance covers  the risk to ‘pillion riders’ on two wheelers and ‘gratuitous occupants’ travelling in private cars. They cover the Own Damage (OD)  or Vehicle damage risk also.


While so, the OD portion is granted year on year basis . Not long term. The distinction is too critical to be ignored. The result is that while the compulsory third party ( TP)  cover is protective for 3/5 years, as the case may be, the OD portion is annual. And renewal of OD alone comes  after the first year and  can be with another insurance company also.


Here comes the tricky or sensitive or ugly head. . TP plus OD alone renders the cover comprehensive. And a comprehensive cover alone comes under the scope of IRDA circular of 2009 vintage.(as held in Laxmi,Balakrishnan cases of Supreme Court).  Sans OD cover, it is an Act or Liability only cover. And does not cover the risk to pillion riders/gratuitous occupants. That makes all the difference to a  Life & Death scenario, to the said segment of victims.


The result is that now we have the spectacle of long term insurance policies issued for 3/5 years to new motor vehicles . Only TP portion is  for 3/5 years. The OD portion is one year alone. From the second year,  the long term policy, unless renewed for OD portion, will morph into an Act policy. Or the owner may renew the OD portion with a different insurer.


The consequences are disastrous for victims and owners of vehicles. On the date of accident, the long term policy may be in the second to fifth years. Or second to fifth year OD portion may be with another insurer. The insurers are inclined to deny indemnity to pillion riders and gratuitous occupants alleging that they had granted only TP cover and being Act policies,they were not liable for such risks. Or granted only OD covers. Quixotic but possible. Is it permissible? That is the larger question. And what is the way out until the issue is addressed by the powers they be?


And if the OD portion was with another insurer, they too would deny TP indemnity. The victim is left in the lurch on the road. Road to Hell is paved with good intentions,  as in the long term insurance cover. Ideally, if TP cover was with one and OD portion with another, fairness commends, conjointly, there is Package or Comprehensive Cover. Hence, pillion riders and gratuitous occupants must get coverage at an apportionment of 50:50 between the two insurers.


Forget it, neither insurer would readily agree. IRDA may need to intervene and clarify. Or the courts ‘iron out the creases’ and order so. It may be challenged and litigation may delay receipt of Just compensation. It would be fertile ground for the practitioners to smile all the way to the bank. Victims? Who would care?


It is a very serious issue, which has raised its ugly head only now, as the long term insurance covers became a reality on and from 28th Aug,2018 ( IRDA circular)  alone. The claims are coming home to roost only now, as litigation takes time. IRDA is duty bound to take note and direct the insurers to deal with such ticklish claims to provide relief. Or the Supreme Court take note and provide the solution Pan India, as  it was they who directed long term insurance in the first place.


It is one’s fervent wish, hope and prayer ( considering the recalcitrant commercial ways of insurance companies) that either or both the institutions,  IRDA and Supreme Court of India, ( suo Motu or in tandem) take note of this vexed issue, adversely  impacting the lives, limbs, properties of innocent pillion riders on two wheelers and/or gratuitous occupants travelling in private cars, for no fault of theirs, here and now, to render JUSTICE.


( Author  of Motor Vehicles Laws,2019 and Co author with Sharath Chandran, Principles of Insurance Law, 2021, both LexisNexis Butterworths Publications, and practising advocate in the Madras High Court)








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