Motor Vehicles Act Section 147 — Requirement of policies and limits of liability
CHAPTER IX MOTOR VEHICLES TEMPORARILY LEAVING OR VISITING INDIA
Civil
Summary
Sub-section (1) sets out what an insurance policy must contain to meet the requirements of this Chapter. It must be issued by an authorised insurer, and it must insure the person or classes of persons named in the policy to the extent described in sub-section (2).
Under clause (a) of sub-section (1), the policy must be issued by a person who is an authorised insurer.
Under clause (b) of sub-section (1), the policy must insure the person or classes of persons specified in the policy to the extent specified in sub-section (2). This covers two types of liability. First, under sub-clause (i), it covers any liability the insured person may incur for the death of or bodily injury to any person, including the owner of the goods or their authorised representative carried in the motor vehicle, or for damage to any property of a third party, caused by or arising out of the use of the motor vehicle in a public place. Second, under sub-clause (ii), it covers the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place.
The Explanation to sub-section (1) clarifies that the death of or bodily injury to any person or damage to any property of a third party is considered to have been caused by or to have arisen out of the use of a vehicle in a public place, even if the person who died or was injured, or the property that was damaged, was not in a public place at the time of the accident, as long as the act or omission that led to the accident occurred in a public place.
Sub-section (2) states that, despite any other law in force, for the purposes of third party insurance related to either the death of a person or grievous hurt to a person, the Central Government shall prescribe a base premium and the liability of an insurer in relation to such premium for an insurance policy under sub-section (1), in consultation with the Insurance Regulatory and Development Authority.
Sub-section (3) provides that a policy will have no effect for the purposes of this Chapter unless and until the insurer issues a certificate of insurance in favour of the person who took out the policy. This certificate must be in the prescribed form and contain the prescribed particulars of any conditions subject to which the policy is issued, as well as any other prescribed matters. Different forms, particulars, and matters may be prescribed in different cases.
Sub-section (4) states that, despite anything in this Act, an insurance policy issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall continue on the existing terms under the contract, and the provisions of this Act shall apply as if this Act had not been amended by that Act.
Sub-section (5) provides that where a cover note issued by the insurer under this Chapter or the rules or regulations made under it is not followed by a policy of insurance within the specified time, the insurer must, within seven days of the expiry of the period of validity of the cover note, notify this fact to the registering authority or to such other authority as the State Government may prescribe.
Sub-section (6) states that, despite any other law in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.
Official Text
(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 motor vehicle or damage to any property of a third party caused by or arising out of the use of the motor vehicle in a public place;
(ii) against the death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of a goods vehicle, caused by or arising out of the use of the motor vehicle in a public place.
Explanation.—For the removal of doubts, it is hereby clarified 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.
(2) Notwithstanding anything contained under any other law for the time being in force, for the purposes of third party insurance related to either death of a person or grievous hurt to a person, the Central Government shall prescribe a base premium and the liability of an insurer in relation to such premium for an insurance policy under sub-section (1) in consultation with the Insurance Regulatory and Development Authority.
(3) A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected, a certificate of insurance in the prescribed form and containing the prescribed particulars of any condition subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4) Notwithstanding anything contained in this Act, a policy of Insurance issued before the commencement of the Motor Vehicles (Amendment) Act, 2019 shall be continued on the existing terms under the contract and the provisions of this Act shall apply as if this Act had not been amended by the said Act.
(5) Where a cover note issued by the insurer under the provisions of this Chapter or the rules or regulations made thereunder is not followed by a policy of insurance within the specified time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority or to such other authority as the State Government may prescribe.
(6) Notwithstanding anything contained in any other law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.