The legal responsibility of a insurance coverage firm to pay third-party damages doesn’t freeze merely as a result of the car has been employed out by the registered proprietor, the Supreme Court docket has held in a latest order.

The insurance coverage firm would nonetheless need to pay up in case of an accident and can’t lob the duty on to the hirer.

Each the insurance coverage coverage and the car are transferred into the possession of the hirer on the premise of an settlement with the registered proprietor. The hirer turns into the ‘proprietor’ for a specified interval.

“It will likely be deemed that that car was transferred together with the insurance coverage coverage, even when it have been insured on the occasion of the unique proprietor. Thus, the insurance coverage firm wouldn’t be capable to escape its legal responsibility to pay the quantity of compensation,” a Bench of Justices S. Abdul Nazeer and Krishna Murari held on July 14.

The case pertains to a deadly accident involving a bus employed by the Uttar Pradesh State Transport Company in 1998.

The household of the accident sufferer had approached the Motor Accident Claims Tribunal claiming compensation.

The tribunal ordered the insurance coverage agency to pay ₹ 1.82 lakh to the dependants of the useless man.

Nonetheless, the insurance coverage firm appealed to the Allahabad Excessive Court docket on the grounds that the company had employed the car. The bus was underneath the “management” of the Company when the accident befell. The corporate stated it had no settlement with the company and its contract of insurance coverage was solely restricted to the registered proprietor.

The Excessive Court docket, in 2009, agreed and exempted the insurance coverage firm from the legal responsibility and ordered the company to pay the household.

The company subsequently approached the Supreme Court docket, which put aside the HC choice and confirmed the tribunal verdict.