Third Party Insurance deemed to be transferred along with effective control over vehicle in a Hire Agreement

Last updated: 19 April 2022

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Quick Summary

The Supreme Court has ruled that third-party insurance for a vehicle is automatically transferred when effective control of that vehicle is handed over under a hire agreement. This means the entity exercising control, rather than the registered owner, is considered the 'owner' for insurance purposes during the hire period. Consequently, the insurance company remains liable to third parties in case of an accident, even if the policy was initially taken out by the registered owner.

Court :
Allahabad High Court

Brief :
When a transport corporation hires a motor vehicle for use from its registered owner, the third-party insurance coverage will also be deemed to be transferred along with the vehicle, reiterated the Supreme Court in a recent decision. The person who is having effective control and command of the vehicle will be regarded as the 'owner'. Therefore, along with the vehicle it must be deemed that the existing insurance policy also remains transferred for the period of hire as agreed.

Citation :
CIVIL APPEAL NOS. 18490-18491 OF 2017

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Judgement posted by

FCS Deepak Pratap Singh

Associate Vice President - Secretarial & Compliance (SBI General Insurance Co. Ltd.)

Dear Friends, MyselfFCSDeepak P. Singh ( B.Sc.. LLB, FCS. FIII, CIAFP, CRMP, ID) , A Fellow Member of ICSI, Law Graduate ,Fellow Member of Insurance Institute of India, Certified Independent Director ,Certified Insurance Anti Fraud Professional , Certified Risk Governance Professional ( ICSI-III) and cleared Limited I ... Read more

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