‘Bumper-to-bumper’ vehicle insurance mandatory from September 1

All new vehicles to be sold in Tamil Nadu from September 1 will come with compulsory ‘bumper-to-bumper’ insurance, ruled the Madras High Court on Thursday (August 26).

This insurance will be mandatory in addition to the coverage of the driver, passengers and the owner of the vehicle for five years. After that, the responsibility of the safety of the driver, passengers and third parties rests with the owner of the vehicle.

‘Bumper-to-bumper’ insurance gives complete coverage of the vehicle, without considering depreciation of its spare parts. Therefore, if a vehicle owner meets with an accident and have damages that need covering, the insurer will not deduct the depreciation value from the coverage.

Justice Vaidyanathan gave the landmark judgment while responding to a writ petition from the New India Assurance Company Limited in Avalpoondurai, which was challenging the orders dated back to December 7, 2019, of the Motor Accidents Claims Tribunal, Special District Court in Erode.

“This court directs that whenever a new vehicle is sold after September 1, it is mandatory for coverage of bumper-to-bumper insurance every year, in addition to covering the driver, passengers and owner of the vehicle, for a period of five years. Thereafter, the owner of the vehicle must be cautious in safeguarding the interest of driver, passengers, third parties and himself/ herself, so as to avoid unnecessary liability being foisted on the owner of the vehicle, as beyond five years, as on date there is no provision to extend the bumper-to-bumper policy, due to its non-availability,” Justice Vaidyanathan said.

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The New India Assurance Company Limited rest its case on the point that the insurance policy was only an ‘Act Policy’, thereby providing cover only to the vehicle by a third party and not the occupants of the vehicle itself. The insurance company stated that the car owner would have to pay extra premium to get coverage for an occupant of the vehicle.

Third-party insurance, which is also called ‘act-only’ insurance, is mandatory for all vehicle owners as per the Motor Vehicle Act. In this case, the insurer offers protection against damage to the third-party vehicle, personal property and physical injury.

In this particular case, the claimants, as the vehicle, in which their breadwinner was travelling/driving, was covered only with third-party insurance. Justice Vaidyanathan could not help but deny the claim of accident benefits ordered by the Motor Accidents Claims Tribunal in Erode. The High Court thus quashed the order of the Tribunal awarding a compensation of ₹14.65 lakh to K Parvathy and three others.

To set the right precedent, the High Court order made it clear that it by no means will stop claimants from claiming compensation for the death of the deceased from the owner of the car.

The Madras High Court order essentially means that all accident victims in the state will now have greater insurance coverage.