To answer your question relating to the third party insurance of a motor vehicle, let me reproduce Section 147(1) of the Motor Vehicles Act, 1988:
“147. Requirements of policies and limits of liability.—(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which—
(a) is issued by a person who is an authorised insurer; and
(b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)—
(i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place:
Provided that a policy shall not be required—
(i) to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen’s Compensation Act, 1923 (8 of 1923), in respect of the death of, or bodily injury to, any such employee—
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c) if it is a goods carriage, being carried in the vehicle, or
(ii) to cover any contractual liability.
Explanation.—For the removal of doubts, it is hereby declared that the death of or bodily injury to any person or damage to any property of a third party shall be deemed to have been caused by or to have arisen out of, the use of a vehicle in a public place notwithstanding that the person who is dead or injured or the property which is damaged was not in a public place at the time of the accident, if the act or omission which led to the accident occurred in a public place.”
It should be clear from the above that a passenger travelling in a private car, which only has a third party insurance, will not be covered under such insurance policy.
There are some Supreme Court judgments also on this issue, as per which in terms of Section 147 of the Act a contract of insurance must be taken by the owners of the vehicle only in regard to reimbursement of the claim to a third party. It was held that the provisions of the Act and, in particular, Section 147 of the Act were enacted for the purpose of enforcing the principles of social justice, and that it, however, must be kept confined to a third-party risk. A gratuitous passenger would not be covered by a contract of insurance entered into by and between the insurer and the owner of the vehicle in terms of Section 147 of the Act. The insurance policy which is a statutory policy or a third party policy does not cover the risk of death of or bodily injury to a gratuitous passenger. [For example, see: Oriental Insurance Co. Ltd. v. Sudhakaran K.V., (2008) 7 SCC 428 : AIR 2008 SC 2729.]
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. List of his YouTube Videos.
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