No vehicle insurance for victims if policy is in name of ex-owner

A customer buying a vehicle already in use must not only get it transferred in his/her name in the transport office record but also remember to apply it within 14 days before the insurance company to get the insurance policy transferred in his/her name.

A South Delhi resident, who purchased a used car but did not get the insurance policy transferred in his name, was refused insurance cover by the State Consumer Dispute Redressal Forum since the policy was in the name of the previous owner on the date of the accident.

Fully insured

The complainant had purchased the fully ensured Maruti Esteem car from Sahara India Commercial Corporation Ltd. The car was insured with the National Insurance Company from January 1, 2006, to December 31, 2006.

The car met with an accident on August 21, 2006. The complainant filed a claim for a sum of Rs.45,198.

The insurance company repudiated the claim on the ground that on the date of the accident, the complainant did not have any insurable interest since the car continued to be in the name of M/s Sahara India Financial Corporation, Lucknow.

The complainant moved the district consumer forum alleging deficiency in services.

The district forum, finding the insurance company to be deficient, directed it to pay the insurance amount along with interest of nine per cent annually. It further directed the insurance company to pay a compensation of Rs.20,000 to the complainant besides a cost of Rs.5,000.

The insurer moved an appeal to the State commission contending that the order of the district forum suffers from palpable illegality.

It submitted that the district forum relied on a 2007 judgment titled Narayan Singh vs. New India Assurance Company wherein it was held that the benefits under the insurance policy in force will automatically stand transferred to the new purchaser.

The National Insurance Company here added that “it appears that the subsequent judgement of the National Commission in a 2010 case was not brought to the notice of District Forum wherein it was held that in case the vehicle on the date of accident stood in the name of previous owner, the transferee has to apply in writing within 14 days from the date of transfer to the insurer for making necessary changes”.

Also, as per apex court ruling, deemed transfer of insurance policy under Section 157 of the Motor Vehicles Act is restricted to third party risks, does not apply to other risks.