Accidental Claims

Indian Laws on Accident Claims and Compensation

Indian laws on accident claims are designed to ensure that victims receive fair compensation while balancing the interests of both victims and liable parties, such as insurance companies. The Fatal Accidents Act, 1885 laid the foundation for accident claims in India by granting legal heirs the right to seek compensation in case of death caused by negligence. However, as automation and accidents resulting in significant loss of life and property increased, the government recognized the need for more effective legislation.

In 1988, the Motor Vehicles Act was introduced to strengthen and streamline the process of filing accident claims. This Act not only made third-party insurance mandatory for all vehicles but also set up the Motor Accident Claims Tribunal (MACT) to adjudicate accident claims, ensuring faster relief to victims.

Key provisions of the Act include:

• No Fault Liability (Sections 140-144): Compensation is granted without the need to establish fault, especially in hit-and-run accidents where the offending vehicle is unidentified. Compensation is available if:
  • The accident was caused by the offending vehicle.
  • The vehicle was insured.
  • Death or injury occurred due to the accident.
• Third-Party Insurance (Sections 145-164): This makes it mandatory for vehicle owners to have third-party insurance to cover claims for injuries or deaths caused by their vehicles.
• Liability and Defenses: The Act imposes unlimited liability on the insurance companies while allowing only limited defenses, which they must prove. These defenses include:
  • Use of the vehicle for illegal purposes (e.g., racing).
  • Use of a vehicle not authorized by the permit.
  • Drivers operating the vehicle without a valid license or while disqualified.
  • Invalid or void insurance policies due to non-disclosure of material facts.

The Supreme Court has reinforced these provisions by limiting the scope of legal defenses available to insurance companies, ensuring that victims’ rights to compensation are upheld while maintaining a fair legal framework.