The Madras High Court has held that a Two-Wheeler Bundled Insurance Policy covers the risk of a pillion rider, and consequently, an insurance company cannot evade liability by contending that such a policy is equivalent to an “Act Only Policy”. The Court clarified that under a bundled policy introduced from 2018 onwards, occupants travelling on the insured two-wheeler, including the pillion rider, are covered under the third-party liability clause.
A Division Bench of Justice C.V. Karthikeyan and Justice K. Rajasekar dismissed an appeal filed by ICICI Lombard General Insurance Co. Ltd., challenging the Motor Accident Claims Tribunal’s award directing it to compensate the family of a deceased pillion rider.
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The claim arose from a road accident that occurred on 11 November 2020, in which the deceased, travelling as a pillion rider on a motorcycle, sustained fatal injuries after the rider allegedly drove rashly and collided with a reflector board placed on the highway. The Tribunal awarded compensation to the deceased’s legal heirs and directed the insurer to pay the compensation and recover the amount from the vehicle owner, holding that there had been a violation of the policy conditions.
Before the High Court, the insurer argued that the policy issued for the motorcycle was only an Act Only Policy, though described as a Bundled Policy, and therefore did not cover the risk of a pillion rider. Relying on the Supreme Court’s decision in National Insurance Co. Ltd. v. Balakrishnan, it contended that only a comprehensive/package policy extends such coverage, while an Act Only Policy does not.
Rejecting the contention, the High Court observed that the Two-Wheeler Bundled Policy, introduced in 2018, is distinct from both the traditional Act Only Policy and the Comprehensive/Package Policy. Referring to its earlier judgment on the issue, the Bench explained that under Section II (Liability to Third Parties) of the bundled policy, the insurer undertakes to indemnify the insured against liability arising from the death or bodily injury of any person, including occupants travelling in the insured vehicle, provided they are not carried for hire or reward.
The Court noted that the policy in the present case specifically provided five years’ third-party liability coverage, the premium for which had been paid, and that the accident occurred within the policy period. It therefore held that the insurance company was liable to indemnify the insured and satisfy the compensation awarded to the claimants.
Holding that the insurer could not escape liability under a bundled policy by equating it with an Act Only Policy, the Court dismissed the appeal. It also set aside the Tribunal’s direction permitting the insurer to pay and recover the compensation from the vehicle owner, making the insurer directly liable to satisfy the award. The Court directed the insurance company to deposit the compensation, along with interest and costs, within six weeks.
