Exploring the Legal Ramifications of Pillion Rider Claims Under Third-Party Insurance

This article is written by Anurag Moga, a lawyer graduated from the Army Institute of Law. It examines the legal implications of pillion rider claims under third-party insurance policies for two-wheelers in India. The discussion encompasses historical perspectives, recent judicial decisions, and the evolving landscape of insurance coverage for pillion riders, focusing on the impact of statutory and comprehensive insurance policies on such claims.

Two-wheelers are the most common form of transportation in India, the second most populous country in the world, because they are convenient, readily available, reasonably priced, have a good mileage, and are easy to manoeuvre through lengthy traffic jams. A two-wheeler has a standard seating capacity of two, which includes the rider and the pillion rider. According to the Cambridge dictionary, the term "pillion" refers to a seat or location behind a person riding a motorcycle where a passenger might sit. Now the question arises: in India, some little children are sitting on fuel tanks; are they pillion riders?

According to the National Crime Records Bureau (NCRB) report for 2021, approximately 1,55,622 individuals died as a result of road traffic incidents. Among these fatalities, 70,000 were linked to the operation of two-wheeled vehicles. Upon close analysis of the data, it becomes evident that pillion riders are more prone to sustaining fatal injuries compared to the riders, primarily due to their failure to wear helmets. In response to the concerning circumstances, the World Health Organization has made a challenging decision to decrease road accidents by 50% by the conclusion of 2030 & to adhere the guidelines, the transport commissioner has instructed all regional transport officers (RTOs) to impose fines on traffic rule violators in accordance with the Motor Vehicle Act. In the event of minors breaking the rules, their guardians will be fined, and a license will not be issued until the minor turns 25.

here are two approaches to reforming a situation: enforcing penal laws and providing compensation to victims. Even though law enforcement authorities take proactive steps to minimize unexpected occurrences, the judicial system continues to handle daily matters because of the nature of social welfare laws. The position of the pillion rider has been a topic of debate for quite a while. As per Section 129 of the MV Amendment Act 2019, every individual riding or being carried on a motorcycle, above the age of 4 years should wear protective headgear. The only exemption is for Sikhs wearing turbans. Covering the risk of pillion riders under standard motor insurance policies is necessary to provide relief. Previously, pillion riders did not have coverage under the third-party liability policy. However, they are now entitled to receive compensation in the event of injury or death.

Two-Wheeler Insurance and Legal Development in the Position of Pillion Rider 

There are two types of two-wheeler insurance policies: the first is a third-party, act-only, or liability-only policy, whereas the second is a standard, comprehensive, or package policy. As per Section 146 of the MV Act, it is mandated to have third-party insurance for the use of a motorcycle or two-wheeler in a public place. Earlier, third-party insurance covered only the risks of third-party damages, injury, or death in an accident, and pillion riders were not given adequate compensation. On the other hand, the Standard Package policy covers the risks of both rider and pillion rider.

Now the question arises, whether the third party includes all other persons, other than the insured, who is the first party, and the insurer, who is the second party.

The division bench of the Supreme court in the case of United India Insurance Co. Ltd., Shimla v. Tilak Singh and Ors., upholds the contention of the appellant Insurance Company that it owed no liability towards the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was statutory policy, and hence it did not cover the risk of death of or bodily injury to a gratuitous passenger."

Also some recent decisions of apex Court, viz., National Insurance Co. Ltd. v. Laxmi Narain Dhut, Oriental Insurance Co. Ltd. v. Meena Variyal  and New India Assurance Co. Ltd. v. Ved Wati held that “The provisions of the Act, and, in particular, Section 147 of the Act were enacted to enforce the principles of social justice. It, however, must be kept confined to a third-party risk. A contract of insurance that is not statutory in nature should be construed like any other contract. We have noticed the terms of the contract of insurance. It was entered into to cover the third-party risk and not the risk of the owner or a pillion rider.”

In May 2008, the division bench of Apex court ruled on a Special Leave Petition, in the case of Oriental Insurance Co. Ltd vs Sudhakaran K.V. & Ors, stating that

the insurance company is not responsible for the pillion rider of a motor vehicle unless the appropriate premium is paid to cover their risk,

the legal obligation outlined in Section 147 of the Act does not extend to injuries or death of the vehicle owner or the pillion rider, and

if an accident occurs due to reckless riding of the scooter rather than the fault of another vehicle's driver, the pillion rider on a two-wheeler should not be regarded as a third party.

The judgments from the highest court make it clear that the liability-only or act-only policy does not cover the risk of a pillion rider. However, some may argue that this seems unfair because there are cases where the rider is at fault, and therefore, as a tortfeasor, they should not have the right to claim compensation. Nevertheless, pillion riders are typically not at fault.

In 2018, the Supreme Court issued a significant ruling in the case of The New India Assurance Co. Ltd. vs. Smt. Mithilesh Mishra. This judgment referenced a previous decision from the case of National Insurance Company Limited vs. Balakrishnan and another, in which the Supreme Court made mention of the IRDA circulars. On November 16, 2009, the Insurance Regulation and Development Authority (IRDA) circulated a directive to all General Insurance Company CEOs regarding the inclusion of a pillion rider on a two-wheeler and the occupants of a private car under the Standard Motor Package Policy. 

On November 26, 2009, in front of all the CEOs of general insurance companies undertaking motor insurance business, the court issued an order to closely adhere to the circular of November 16, 2009. Furthermore, the companies are geared towards

1. Withdraw any pleas, including contests, that have been taken and are pending before MACT within 7 days.

2. Withdraw all appeals pending in the High Court within two to four weeks. 

3. Request that the attorneys on record withdraw the appeals pending before the Apex Court and take effective steps to guarantee proper compliance with the court order and circular within two months. The information may be centralized with the Secretariat of the General Insurance Council.

CONCLUSION

From the judicial precedents, it is clear that the risk of a pillion rider is covered under the Standard Motor Package Policy. As per the guidelines of the INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY: There are two types of motor insurance policies: the first is an act-only or liability-only policy, which is also a statutory requirement under the MV Act; and the second is a package policy or comprehensive policy, which is a combination of an act-only policy and own damage cover. The Standard Package policy provides coverage for various risks resulting from natural disasters, terrorist acts, or damages arising from unexpected events. However, to reduce the premium cost, the insured chooses Act-only policies. To ensure affordability, the Indian Motor Tariff has introduced endorsement no. 70, which stipulates that an additional premium must be paid to cover the pillion rider in the case of an Act- only policy.

References

1 United India Insurance Co. Ltd., Shimla v. Tilak Singh and Ors., 2006 (4) SCC 404

2 National Insurance Co. Ltd. v. Laxmi Narain Dhut, (2007) 3 SCC 700

3 Oriental Insurance Co. Ltd. v. Meena Variyal, (2007) 5 SCC 428

4 New India Assurance Co. Ltd. v. Ved Wati, (2007) 9 SCC 486 5 National Insurance Company Limited v. Balakrishnan and another, (2013) 1 SCC 731

6 Insurance Regulatory and Development Authority, IRDA/NL/CIR/F&U/073/11/2009