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Vehicle Insured in India, Met With an Accident Abroad? You Might Be Able to Claim Insurance

As per the policy, the insurance company may reject the claim if the accident occurs outside the geographical area as defined in the policy.

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In a first, the Punjab and Haryana High Court has ruled that if a vehicle registered and insured in India meets with an accident in another country, the insurance company would be liable to pay the claim.

On 18 June 1995, in an accident that occurred in Nepal, 54 pilgrims lost their life. The pilgrims were from Kurukshetra and were in Nepal when the accident took place. The driver of the bus lost control, and the bus fell into the Trishuli Nadi, a river in Nepal.

While Section 1 of the Motor Vehicles Act does say that the act applies to the ‘whole of India’, the High Court held that the insurance policy is “attached to the vehicle in question and not to the geographical expanse of the area of operation of the vehicle.”

As per the policy, the insurance company may reject the claim if the accident occurs outside the geographical area as defined in the policy. There are two geographical zones for automobile insurance, as defined by the Insurance Regulatory Development Authority of India (IRDAI) – Zone A and Zone B.

While zone A covers metro cities such as Delhi, Mumbai, Kolkata and Chennai, zone B covers the rest of India. While normally, automobile insurance is applicable throughout the country, the insured should ensure that the insurance policy has the same.

However, in this particular case, Justice Rajbir Sehrawat was of the opinion that, “Once insured, the vehicle is insured to cover all geographical areas where the vehicle is authorized by the authorities to travel.”

“The insurance company cannot avoid its liability to pay the compensation only on the ground that the vehicle was used in any particular city, state or a particular geographical area. The company cannot even avoid its liability qua the third party.”

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The matter had reached before the High Court in the wake of an appeal filed by owners of the bus before the High Court after the Motor Accident Claim Tribunal directed them to pay compensation of Rs 4.34 lakh to the relatives of one of the victims. The tribunal had absolved the insurance company because the accident occurred in Nepal, so the insurance company was not liable.

The insurance company argued before the High Court that since the policy is limited to cover the vehicle to be used only in India, they are not liable for payment of compensation for any accident occurring outside India. However, setting aside the tribunal’s order, the High Court held that the payment of the awarded amount should be made by the insurance company, as reported in Economic Times.

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