Patna HC expands insurance liability for paid drivers and cleaners under Motor Vehicles Act [Read Judgment]

New Delhi: The Patna High Court has delivered a significant judgment clarifying insurance companies’ liability for paid drivers and cleaners under motor vehicle insurance policies, emphasizing the importance of additional premium payments. Justice Sunil Dutta Mishra made crucial observations while addressing an appeal by Shri Ram General Insurance Co. Ltd. against a compensation award.

The court examined a case involving a fatal accident in which a cleaner, Premshankar Modi, died when a tractor with a trailer overturned due to rash driving. The court noted, “When the owner of a vehicle pays an additional premium and the same is accepted by the insurance company, the liability of the insurance company is extended under the Motor Vehicles Act, 1988.”

Addressing the scope of insurance coverage, the court observed, “Section 147 of the Act clearly prescribes a statutory liability to cover the risk of paid drivers and cleaners under the insurance policy, which is a matter of contract. Upon payment of such additional premium by the owner, the liability of the owner shifts to the insurance company.”

Court Holds Insurers Liable for Paid Drivers and Cleaners When Additional Premium is Paid

The court highlighted the significance of premium payment, stating, “By accepting an additional premium, the insurance company indemnifies the owner for paid drivers and/or cleaners, and the risk of drivers/cleaners is thereby covered.”

The court upheld the compensation of Rs. 11,93,000 with 6% interest awarded by the Motor Accident Claims Tribunal, directing the insurance company to deposit the amount within eight weeks.

Judgment Highlights Key Provisions of Motor Vehicles Act and the Role of Premium Payments in Coverage

Rejecting the insurance company’s appeal, the court concluded that a cleaner employed by the vehicle owner cannot be considered a gratuitous passenger, making the insurer liable for compensation when additional premium has been paid for such coverage.

Mr. Alok Kumar @ Alok Kr Shahi appeared for the appellant insurance company.
Mr. Raj Kumar Choudhary appeared for the respondent claimants.

Case title: Shri Ram General Insurance Co. Ltd. Vs. Radha Devi & Ors.

[Read Judgment]