CASE STUDIES ON MOTOR INSURANCE POLICIES

Preface: With new liberalization policies encouraging FII (Foreign Institutional Investment), Automobile giants all over the world started establishing their base in the Indian Automobile Market with companies like Hyundai, Ford, etc. flooding the market with technologically advanced new models of vehicles. This boom in the automobile industry and the growing consumerism saw a fourfold increase in the premium income from the motor insurance for all the insurers in India. Now everyone knows that the motor insurance business contributes almost 40% of the aggregate premium income to all the types of insurance in General Insurance Sector. With the flourishing of the Automobile Industry for the last one decade, Motor Insurance has become a lucrative business but requires careful underwriting as the number of accidents has increased due to explosion of vehicle users, bad roads, rash & negligent driving and poor maintenance of the vehicles. Although motor manufacturing companies have slowed down their production Motor Insurance is the bread & butter of non-life insurers and also remains almost the same in the next decade too as per the new regulations imposed by the Ministry. As already understood by the employees of insurers/others/intermediaries, all those are engaged in this Indian Insurance Sector, that whenever there is a need for passing various insurance examinations (i.e. mainly while preparing for various types of Multiple Choice Questions) – like the types of the questions are nowadays really widely varying and the latest entrants in the question setters’ endeavor are the Case Study Based MCQs. That’s why I volunteer with this discussion on Motor Case Studies. So, let us now move on to the discussion on Motor Case Studies, one after another. Motor Case Study No.1: A tanker carrying petrol collided with a Truck and overturned in the nearby field. It developed a leak and the next day the nearby villagers gathered to pilfer the leaking petrol. Subsequently, a fire broke out from the leaking petrol and some persons died in the fire. In this context, which of the following is true? a. The heirs of the deceased persons are entitled to compensation under ‘No-fault liability’ under the MV Act b. The heirs of the deceased persons are entitled to compensation under ‘No-fault liability’ as well as ‘Fault liability’ under the MV Act c. The heirs of the deceased persons are not entitled to any compensation as the deaths occurred not out of the use of the Motor vehicle d. The heirs of the deceased are not entitled to any compensation as they were involved in a criminal act of pilferage Motor Case Study No.2: A person was boarding a bus with luggage and decided to keep the luggage on the roof of the bus standing at the bus stand. When he was climbing up the ladder to check his luggage, the ladder gave up. As a result, the man fell and had a head injury leading to his subsequent death. Which of the following is true? a. The accident did not arise out of the use of the motor vehicle as the bus was stationary b. Though the death occurred due to the use of the ladder of the bus, no compensation is payable as the journey has not yet started c. The man is not entitled to any compensation as he was not supposed to scale the ladder of the bus as a passenger d. The man died out of the use of the motor vehicle and is entitled to receive compensation Motor Case Study No.3: A passenger bus drove over a causeway submerged in water. As the bus was reaching the other side of the causeway, the rear wheels slipped and the bus was stranded on one side of the causeway. The passengers were waiting for the water to recede so that they can disembark from the stranded bus. But the water level started rising to force the passengers to climb the roof of the bus. Ultimately the high tide came and the bus was washed away causing several deaths. Which of the following is true? a. The heirs of the deceased are not entitled to any compensation as the cause of death was high tide and not the use of the motor vehicle b. The heirs of the deceased are entitled to full compensation as the deaths occurred due to the negligence of the driver of the bus c. The heirs of the deceased are entitled to ‘No-Fault Liability’ compensation as the deaths occurred without any fault of the driver of the bus d. The heirs of the deceased are not entitled to any compensation as they were a party to the action of the driver crossing the submerged causeway and did not prevent it. Motor Case Study No.4: Mr. Suresh, who was the owner of a car, already sold his car for its price. When the cheque received as the price of the car could not be en-cashed and meantime the car met an accident on the road he claimed indemnity from the insurer for the loss of the car. Is his claim valid? a. Yes – the claim is valid & payable b. Partially payable c. Claim cannot be paid by the insurer d. The claim is payable only to the new owner [Note: In the above case, the claim put forth by Mr. Suresh is not justified because, as the court also held that the loss was the loss of the sale proceeds and not the loss of the car and so the insurer is not liable to pay any compensation. (Eisinger vs. GAFL).] Motor Case Study No.5: Mr. Samir, the owner of the insured car sold away from the car but not intimated to the insurer and thereafter while driving the new car he has purchased – that car met with an accident and he claimed indemnity from the insurer who covered the sold car. Whether this claim is payable? a. Yes – the claim is valid & payable b. Mr. Samir cannot claim any amount from the insurer c. The claim is payable only to the new owner who purchased this car. d. The claim is payable on a non-standard basis [Note: Mr. Samir cannot claim any amount by way of compensation from the insurer because the policy ceased to have an effect on the sale of the insured car and so he could no longer get any benefit of insurance under the policy.] About the author Anabil Bhattacharya B.M.E. (Honours), F.I.I.I., Retired Chief Manager, H.O. National Insurance Co. Ltd. Kolkata.