Supreme Court: Insurance firms cannot deny accident claims due to route deviation

The Supreme Court has ruled that insurance companies cannot deny accident compensation solely due to route deviations or permit violations. The court said such technicalities cannot override justice and upheld a Karnataka High Court order directing payment to the victim’s family

New Delhi: The Supreme Court has ruled that insurance companies cannot deny compensation to accident victims solely because the vehicle’s route deviated and it was in violation of the permit.

A bench comprising Justices Sanjay Karol and Prashant Kumar Mishra said the purpose of an insurance policy in the present context is to shield the owner/operator from direct liability when such an unforeseen/unfortunate incident takes place.

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“To deny the victim/dependents of the victim compensation simply because the accident took place outside the bounds of the permit and, therefore, is outside the purview of the insurance policy, would be offensive to the sense of justice, for the accident itself is for no fault of his. Then, the insurance company most certainly ought to pay,” the bench said.

The top court observed while dismissing appeals filed by a vehicle owner and insurer, The New India Insurance Company Limited. On October 7, 2014, a motorcyclist was hit by the offending vehicle being driven in a rash and negligent manner, resulting in his death on the spot.

The Motor Accident Claims Tribunal awarded an amount of Rs 18.86 lakh as compensation along with interest. Being aggrieved with the amount of compensation awarded, the petitioner filed an appeal before the Karnataka High Court because the Tribunal did not correctly calculate the compensation.

The insurance company also challenged the Tribunal’s order on the grounds of violation by the insurer of the conditions enumerated in the policy. The high court directed the insurance company to satisfy the award as passed by the Tribunal and granted the right to recover the amount from the owner of the bus.

While the insurer challenged the high court’s direction to pay compensation first and later recover from the owner, the owner challenged the high court’s order allowing recovery from him.