Can Pillion Rider Claim Insurance In Case Of 'Act Only Policy'?

The bench of Justice Dhananjaya Y. Chandrachud and Justice Hrishikesh Roy has issued notice in a special leave petition filed by an Insurance Company against a Karnataka High Court Judgment.

The contention raised (in Branch Manager Legal, National Insurance Company Limited vs. Pintu) by the insurance company was that since the insurance policy was an "act only policy" and not a "comprehensive package policy", the insurer is not liable for the injuries which were sustained by the pillion rider.

Karnataka HC rejected this contention and held:

"The pillion rider cannot be considered as either insurer or the insured and therefore, he is also third party so for as the liability of the insurer is concerned and as such the insurer cannot avoid his liability to pay the compensation on the ground that policy does not cover the risk of the pillion rider. Admittedly, the policy covers the risk of the third party and that the pillion rider has to be considered as a third party."

It is to be noted that in Oriental Insurance Company Ltd. v. Sudhakaran K. V., the Supreme Court has dealt with the issue whether a pillion rider on a scooter would be a third party within the meaning of Section 147 of the Act. It had held as follows: (i) the liability of the insurance company in a case of this nature is not extended to a pillion-rider of the motor vehicle unless the requisite amount of premium is paid for covering his/her risk; (ii) the legal obligation arising under Section 147 of the Act cannot be extended to an injury or death of the owner of vehicle or the pillion-rider; (iii) the pillion-rider in a two-wheeler was not to be treated as a third party when the accident has taken place owing to rash and negligent riding of the scooter and not on the part of the driver of another vehicle."

Later in National Insurance Co. Ltd. v Balakrishnan, the Supreme Court, taking note of IRDA Circular, noted that the comprehensive/package policy of a two wheeler covers a pillion rider and comprehensive/package policy of a private car covers the occupants and where the vehicle is covered under a comprehensive/package policy. But it was observed that an "Act Policy" stands on a different footing from a "Comprehensive/Package Policy".