Compulsory Third-Party Insurance

In one line

No motor vehicle may be used in a public place unless a policy is in force covering death, bodily injury and third-party property damage arising out of its use, and the certificate of insurance binds the insurer even where the policy does not.

Why the Chapter exists

An award against a driver who has nothing is a piece of paper. The whole architecture of Chapter XI is designed so that there is always somebody solvent behind the wheel. In National Insurance Co. Ltd v. Swaran Singh, (2004) 3 SCC 297, the Supreme Court put it in a sentence a student should be able to reproduce: the Chapter providing compulsory insurance of vehicles against third-party risks is a social welfare legislation to extend relief by compensation to victims of accidents caused by the use of motor vehicles, and its provisions must be interpreted so as to effectuate that object.

Section 145: the definitions that matter

• "authorised insurer": an insurer carrying on general insurance business in India and registered by the Insurance Regulatory and Development Authority of India, and any Government insurance fund authorised under the General Insurance Business (Nationalisation) Act 1972.
• "certificate of insurance": a certificate issued by an authorised insurer under section 147, including a cover note complying with the prescribed requirements.
• "grievous hurt": the same meaning as in section 320 of the Indian Penal Code.
• "hit and run motor accident": worked in chapter [Hit and Run, and the Golden Hour].
• "property": includes roads, bridges, culverts, causeways, trees, posts, milestones, and the baggage of passengers and goods carried in any motor vehicle.
• "third party": includes the Government, the driver and any other co-worker on a transport vehicle.

The last definition is the one examiners like. The driver of the vehicle is, for this Chapter, a third party.

The reference to section 320 of the Indian Penal Code has not been updated: since 1 July 2024 grievous hurt is defined by section 116 of the Bharatiya Nyaya Sanhita 2023, and section 8(1) of that Sanhita provides that a reference in any other law to a repealed provision is to be construed as a reference to the corresponding provision of the Sanhita.

Section 146: the prohibition

Sub-section (1). No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force, in relation to that use, a policy of insurance complying with the requirements of the Chapter.

Proviso. A vehicle carrying, or meant to carry, dangerous or hazardous goods must also have a policy under the Public Liability Insurance Act 1991, which is chapter [The Public Liability Insurance Act 1991].