"Act-Only Insurance" Of Private Vehicle Only Covers Third-Party, Not Occupants: Rajasthan HC Sets Aside 'Recover & Pay' Order Against HDFC Ergo

Rajasthan High Court has affirmed that in the case of a private vehicle insured against the “Act only Policy”, the insurance company is not liable to compensate the occupants of the vehicle since they are not considered to be the “third parties” as required under the Motor Vehicles Act, 1988. And in such cases direction to pay and recover cannot be issued to the insurer.” A bench of Justice Nupur Bhati was hearing an appeal filed by the HDFC Ergo General Insurance Company Limited against a judgment of the Motor Accidents Claims Tribunal as per which the Insurance Company was directed to pay to the occupants of an insured jeep that was involved in an accident owing to rash and negligent driving of the driver. It was the case of the Insurance Company that the jeep was a private vehicle insured under “Act only policy” or “liability only policy” and consequently risk of the occupants was not covered since such occupants were not considered as “third party” under the Act. “In the present case, the vehicle was evidently insured as a 'Private Car Liability Only Policy'/'Act Only Policy' wherein the risk of the occupants was not covered and also no premium was received by the appellant insurance company for the occupants of the vehicle.” Accordingly, the order of the Tribunal was set aside and the appeal was allowed.