Does Insurance Company continue to be liable if motor vehicle is transferred to another person?

Tilak Marg Forum for Legal Questions Forums Business Law Does Insurance Company continue to be liable if motor vehicle is transferred to another person?

This topic contains 1 reply, has 2 voices, and was last updated by Dr. Ashok Dhamija Dr. Ashok Dhamija 6 months, 2 weeks ago.

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  • #4380

    Anonymous
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    If a motor vehicle was under a valid insurance policy and meanwhile during the validity of the insurance policy, the vehicle is sold and transferred by its owner to another person, does the Insurance Company still continue to be liable for any claim under that policy?

  • #4382

    This issue is covered directly under Section 157(1) of the Motor Vehicles Act, 1988, which is  quoted as below:

    157. Transfer of certificate of insurance.—(1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.

    Explanation.—For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.”

    Thus, if the vehicle is transferred to some other person by its owner, the insurance policy is deemed to have been transferred to such transferee and the insurance company will continue to be liable under that policy during the period of validity of the same.

    This issue was further settled by the Supreme Court recently in the case of Firdaus v. Oriental Insurance Co. Ltd., (2017) 15 SCC 674. In this case, the vehicle was insured with Oriental Insurance Co. Ltd. at time of accident resulting in death of the deceased who was driver of the registered owner of vehicle who had allegedly transferred the vehicle to another person. The Supreme Court held that irrespective of whether ownership of vehicle vested with the original owner or with the transferee, the liability of Oriental Insurance Co. continued to be there, since the accident occurred during the period of validity of the insurance policy.

         


    Dr. Ashok Dhamija is a New Delhi based Supreme Court Advocate and author of law books. Read more about him by clicking here. List of his Forum Replies. List of his other articles. List of his Quora Answers.

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