insurance company rejects overloading of vehicle in india

Advertisement Overloading of a vehicle cannot be the sole ground for an insurance company to reject claims for damages caused to the vehicle in a road accident, the Supreme Court has ruled while quashing National Consumer Disputes Redressal Commission(NCDRC)'s order that loss caused to overloaded vehicle wont be compensated.

A bench of Chief Justice T S Thakur and V Gopala Gowda held that carrying more passengers than the permitted seating capacity in a insured vehicle does not amount to a fundamental breach of the terms and conditions of the policy and the insurance company could not eschew its liability towards the damage caused to the vehicle.

It said that the insurance company had to prove that the accident was caused because of the overloading to escape the liability of paying claims. The bench directed the insurance company to reimburse claim to the damages caused to a goods-carrying vehicle travelling with five passengers while seating capacity of the vehicle was only two including driver.
This Court held that the mere factum of carrying more passengers than the permitted seating capacity in the goods carrying vehicle by the insured does not amount to a fundamental breach of the terms and conditions of the policy so as to allow the insurer to eschew its liability towards the damage caused to the vehicle.

The bench said that the insurance company could deny claims only in cases where breach of insurance policy was so fundamental in nature that it brought the contract to an end.

The insurance company, in order to avoid liability must not only establish the defence claimed in the proceeding concerned, but also establish breach on the part of the owner/insured of the vehicle for which the burden of proof would rest with the insurance company. In the instant case, the company has not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle.

The bench quashed the order passed by NCDRC and Haryana State Consumer Disputes Redressal Commission which had allowed plea of insurance company that overloading could be a ground for denying claim for the damages. In the instant case, the insurance company has not produced any evidence on record to prove that the accident occurred on account of the overloading of passengers in the goods carrying vehicle.

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