Third-Party compensation

In today's world, many services require insurance protection. The number of people taking insurance policies for healthcare is increasing every year. Companies often come up with attractive offers when people come to take insurance. However, it's nothing new for companies to look for ways to minimize the amount or refuse to pay when people are in need of money. Many people are not able to claim their rights due to the delay in renewing insurance and other reasons.

The majority of policyholders pay little attention to the terms and conditions even as they sign and accept all of them when purchasing a policy. On the other side, the company won't explain these terms and conditions to the policyholder. The consent letter outlines all the terms that the insurance provider may cite as grounds for rejecting the insured amount. It is only when the compensation is denied that the policyholder becomes aware of it. At least a few people get a higher amount by going to court. That, in turn, is costly and time-consuming. Most frequently, the majority settle the matter by accepting the insurance company's lowest offer. However, there has been a turning point in this matter after Malappuram native Muhammad Rasheed approached the High Court complaining that the insurance amount granted to him by the Tribunal was low. The National Insurance Company had taken the stand in the court that it is not liable to pay compensation if it is proved that the driver was driving the car under the influence of alcohol. The company pointed out that this has been mentioned in the provisions. However, the High Court, which rejected this stand, took a very practical and fair decision. Justice Sophie Thomas ruled that the insurance company is liable to pay compensation to the third party involved in the accident even if the driver is drunk. The insurance companies used to impose a condition where the third party, who is the passerby, also gets punished for the drunkenness of the driver. The company has no right to avoid paying compensation to a third party in case of an accident. Doing so is against natural justice. The fact that the High Court pointed this out clearly will help in the speedy disposal of similar cases in the Tribunal and other courts.

The court also said that the victim does not need to know whether the driver was under the influence of alcohol. On December 13, 2013, the petitioner was travelling in an auto when he was hit by a car and injured. He filed a petition alleging that the Rs 2.4 lakh sanctioned by the Manjeri Tribunal was insufficient. The court directed the company to pay the compensation along with seven percent interest from the date of filing the petition. The company should pay this within two months. The court also sanctioned an increase of Rs 39,000 in the amount.

This ruling makes it very clear that if the driver is drunk, only he or the owner of the car should be held accountable—not the third party. The court also cited earlier rulings from the Supreme Court and the Andhra Pradesh High Court that stated that after the compensation is first given by the company, this sum may be later retrieved from policyholders. Based on this judgment, insurance companies should remove the provision of denying third-party compensation related to the driver's drinking.