HC Ruling on Insurance for Used Vehicle

A Division Bench of the Kerala High Court has held that the insurer is liable to provide third party insurance cover to a new owner of a used vehicle who has renewed the policy of the vehicle in the name of the previous owner on expiry of its term.

The Bench comprising Justice P.R. Ramachandra Menon and Justice Anil K. Narendran held recently that after expiry of the term of the policy existing on the date of transfer, the transferee could take a policy still in the name of the previous owner and claim insurance coverage on the strength of such policy in respect of the liability towards a third party.

The court made the ruling while allowing an appeal filed by K.A. Unnikrishnan against the Pala Motor Accident Claims Tribunal’s action in exonerating the National Insurance Company from the liability of paying compensation in a motor accident case. The petitioner was injured when the autorickshaw he was travelling in had overturned. The tribunal had asked the driver and the previous owner of the vehicle to pay the compensation to the petitioner.

The tribunal issued the order after accepting the contention of the insurance company that the policy was taken in the name of the previous owner by suppressing the material fact that the vehicle had already been transferred to a new owner.

The Bench pointed out that the insurer could have very well refused to issue the policy in the name of the previous owner in view of the entry of the name of the new owner in the registration certificate. But that was not done.