Court ruling on insurance cover for sold vehicle

S. Murlidharan | Updated on October 21, 2012

When a vehicle is sold, the insurance cover therefore remains intact for the residuary term of the policy notwithstanding the sale and the insurer has to compensate the third parties even if the factum of the sale of vehicle has not been brought to its notice as required under law where the accident took place after such changing of hands of the insured vehicle.

The Madras High Court said so in the Oriental Insurance Company Limited v. Jayanthi, Sekar, V.M. Ravi and Nizar Ahmed, rejecting the contention of the appellant-insurer that the law contemplated intimation of the name of the new owner of the vehicle and non-intimation of this vital information rendered the contract of insurance void.

The Madras High Court pointed out that the third parties’ fortunes cannot be held hostage to such technicalities.

(The author is a New Delhi-based chartered accountant)

Published on October 21, 2012

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