The Ministry of Road Transport and Highways (MoRTH) has proposed amendments to Sections 145, 146, and 147 of the Motor Vehicles Act to include the owner-driver as part of the third party. If approved, this change would allow compensation for the death or injury of an owner-driver under third-party insurance—a significant departure from current law.
This proposal follows the Supreme Court’s reference in the Wakia Afrin vs. National Insurance Company case, where the Court questioned insurer liability in owner-driver death cases. The matter has now been referred to a larger bench to examine the broader implications.
Here are the key points:
- Expansion of Third-Party Coverage
MoRTH has suggested redefining “third party” to include the owner-driver, meaning that an owner-driver involved in an accident could be eligible for compensation under third-party insurance policies. - Industry Opposition
Insurance companies have expressed strong opposition, arguing that the change would substantially increase loss ratios and alter the original intent of the Motor Vehicles Act, potentially distorting the law’s framework. - Supreme Court Influence
The proposal was triggered by the Supreme Court judgment in the Wakia Afrin case, which highlighted uncertainties regarding insurer liability when an owner-driver dies in an accident. The Court referred the issue to a larger bench to resolve the broader legal questions. - Pending Judicial Decision
The final determination on whether the owner-driver can be classified as a third party rests with the larger bench of the Supreme Court. If approved, third-party insurance coverage in India would undergo a substantial transformation. - Implications for the Insurance Sector
Insurance companies are concerned about the potential financial and legal repercussions, noting that the proposed amendments could lead to significant increases in claims and premiums.
Understanding Third-Party Insurance
Third-party insurance is mandatory under Sections 145–147 of the Motor Vehicles Act, 1988. It protects individuals other than the vehicle owner or driver who may suffer injury, death, or property damage due to the actions of the insured vehicle.
By law, third-party insurance covers legal liabilities arising from bodily injury, death, or property damage to any person affected by the insured vehicle, excluding the vehicle owner or insurer. The proposed amendments would mark a major shift in this framework, broadening protection to include the owner-driver themselves.