MADURAI : Wondering why insurance companies are accepting policy premiums from vehicle owners through cheques, despite a 2002 notification issued by the Insurance Regulatory and Development Authority (IRDA) allowing companies to receive premiums through e-transfer or card payments, the Madurai Bench of the Madras High Court observed that it is high time that the IRDA and insurance companies raise awareness about the said notification.
Justice K Murali Shankar made the observations in a batch of appeals filed, challenging the orders passed by the motor accidents claims tribunals in Kovilpatti and Virudhunagar in connection with a road accident in which two people died and two others sustained injuries after a car rammed into a lorry on the Aruppukottai-Ettayapuram national highway in July 2009.
According to the order, the insurance company which insured the lorry stated that the lorry owner had given a cheque for the premium of Rs 20,569 for the period between April 2009-2010. But when the cheque was deposited, it was rejected owing to lack of funds in the lorry owner’s bank account, following which the company cancelled the policy. Citing this, the insurance company told the high court that since it had no contract with the lorry owner, it is not liable to pay compensation to the victims.
“When the insurance companies were permitted, as early as October 17, 2002 (notification date) to receive premiums by e-transfer or card payments, this court is at a loss to understand as to why insurance companies are not insisting vehicle owners to accept any of the aforementioned modes of payment, and are still accepting premiums through cheques,” Justice Shankar stated.
Noting that the IRDA’s notification still remains unknown to many, including panel lawyers of insurance companies, the judge opined that the IRDA and insurance companies must raise awareness and encourage vehicle owners to adopt the aforementioned payment modes.
Law enforcement agencies cannot prevent or restrain vehicles from plying on the roads when they are shown the issued insurance policy. At the time, the authorities cannot be expected to verify whether the policy was cancelled or in force on the date, the judge pointed out.
By issuing insurance policies without receiving the payment, the insurers are indirectly allowing vehicles to ply without valid insurance. In case the policy was cancelled subsequently due to the dishonour of the cheque, etc., the dispute would be between the insurer and the vehicle owner and should not affect claims of third parties (victims of motor accidents), the judge observed and directed the company to pay the compensation and recover it from the vehicle owner.