The Supreme Court ruled that the insurance company cannot reject a claim for a vehicle for the reason that the vehicle was overloaded. The Court said that when a vehicle is met with road accident, the insurance company have to pay insurance and it cannot reject the claim stating that it was an overloaded vehicle. The Apex Court quashed that order of National Consumer Disputes Redressal Commission (NCDRC) which had opined that no compensation can be granted to a vehicle that is overloaded. The bench consisted of Chief Justice T S Thakur and Justice V Gopala Gowda.
The bench made it clear that where a vehicle carried more load or passengers than the sanctioned limit or more than the seating capacity of the vehicle, it does not by itself violate the terms and conditions of insurance policy. The insurance company cannot escape from its liability stating that the vehicle carried more passengers or it was overcrowded, the court said. In order to exempt from paying the policy amount, the insurance company have to prove that the accident was caused due to overload of vehicle. But if the accident was caused due to any other reason the company is legally liable to pay compensation as part of policy.
The Court also issued direction to insurance company to compensate the vehicle that carried five passengers even though the seating capacity of the vehicle was two which includes the driver as well. The court also said that the insurance company can escape from liability only if the violation of the terms was such that the contract came to an due to such an incident. Otherwise the company have to pay insurance to the concerned parties. Hence now onwards the insurance companies are obliged to compensate the victims of road accident and cannot deny claims for overload of vehicles.
Adv. Jewel Panicker