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short note on motor vehicle insurance


There are many cases where motor vehicle insurance companies try to escape from its liability to pay for the losses suffered by the motor vehicle owner. 

Section 3 of motor vehicle act, provided for the necessity for driving license. No person shall drive in any public place unless he hold an effective driving license.

Section 4 of the motor vehicle act, provided for the age limit in connection with driving of motor vehicle.

  1. No person under the age of 18 shall drive a motor vehicle

  2. Engine capacity not exceeding 50cc may be driven in public place by a person attaining the age of 16 years

  3. No person under the age of 20 shall drive a transport vehicle 

Section 5 of the motor vehicle act, mention responsibility of owner of motor vehicle to follow section 3 & section 4 of the act. 

Section 146 of the motor vehicle act, allow for the compulsory 3rd party insurance for a motor vehicle by the owner. 

Section 147 of the motor vehicle act, provides for the requirements of policy & limits of liability

Section 149 of the motor vehicle act provides for the duty of insurer to satisfy judgements & award against persons insured in respect of 3rd party risk.

Section 149(2) (a) provides that there has been a breach of specified condition of the policy. The word “Breach” defined as knowingly violating the condition of the policy. 

  • Mare absence of fake or invalid driving license or disqualification of the driver for driving shall not be only criteria for the insurance company to dissolve their liability. 

  • To avoid liability the insurance company must prove that the owner knowingly give the vehicle to a person without valid license and does not exercise reasonable care regarding the use of vehicle

  • The question of whether owner of the vehicle exercise reasonable care in order to determine whether the license of the drive is valid or fake shall be determine case to case basis. 

  • There are Supreme Court Ruling where insurance company argue that-

  1. Driving license of the driver is fake

  2. Driver has no license to drive 

  3. License expired but not renewed 

  • The breach on the part of insured must be a willful and the burden of proof would be on the insurer. 

  • It is not the duty of the owner of the vehicle to verify the license of the driver from the competent authorities. The owner of the vehicle would take the test of the driver, if the owner satisfy that the driver is competent to drive, he can appoint the driver to drive his/her vehicle.

  • The owner of the vehicle shall not be liable to verify the genuineness of the license from the transport offices

  • The onus is on the insurer to prove that the owner of vehicle driven by the driver failed to take reasonable care in employing a qualified and competent driver having valid license. 

  • The owner-driver relationship is a master-servant relationship.

  • If the servant perform task out of employment then the owner shall not liable for the servant misdeeds.

  • The servant shall act within the scope of employment. 

  • The insurance company & the owner of the vehicle are jointly liable to pay compensation to the claimants when the accident is occurred under the course of employment. 

  • Owner not liable for negligence of the driver on the way without knowledge of the owner.


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