Necessity for insurance against third party risk
AI Assist
Summary
Anyone using or allowing the use of a motor vehicle in a public place (other than as a passenger) must have a valid third-party insurance policy for that use meeting this Chapter's requirements. Vehicles carrying dangerous or hazardous goods also need cover under the Public Liability Insurance Act. A paid employee driver is not personally culpable if he genuinely did not know the policy was absent. Certain government and public-authority vehicles can be exempt if a fund is maintained for third-party liabilities.
Example
Rohan drives his employer's truck into a busy market and there is no third-party insurance for the vehicle. The owner will be in breach and liable for third-party claims; Rohan, if driving as a paid employee who genuinely did not know the policy was absent, will not be personally deemed to have contravened the rule.
Bare Act
Enacted text(1) No person shall use, except as a passenger, or cause or allow any other person to use, a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this Chapter:
Provided that in the case of a vehicle carrying, or meant to carry, dangerous or hazardous goods, there shall also be a policy of insurance under the Public Liability Insurance Act, 1991 (6 of 1991).
Explanation
A person driving a motor vehicle merely as a paid employee, while there is in force in relation to the use of the vehicle no such policy as is required by this sub-section, shall not be deemed to act in contravention of the sub-section unless he knows or has reason to believe that there is no such policy in force.
(2) Sub-section (1) shall not apply to any vehicle owned by the Central Government or a State Government and used for Government purposes unconnected with any commercial enterprise.
(3) The appropriate Government may, by order, exempt from the operation of sub-section (1) any vehicle owned by any of the following authorities, namely—
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(a) the Central Government or a State Government, if the vehicle is used for Government purposes connected with any commercial enterprise;
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(b) any local authority;
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(c) any State transport undertaking:
Provided that no such order shall be made in relation to any such authority unless a fund has been established and is maintained by that authority in accordance with the rules made in that behalf under this Act for meeting any liability arising out of the use of any vehicle of that authority which that authority or any person in its employment may incur to third parties.
Explanation
For the purposes of this sub-section, “appropriate Government” means the Central Government or a State Government, as the case may be, and—
(i) in relation to any corporation or company owned by the Central Government or any State Government, means the Central Government or that State Government;
(ii) in relation to any corporation or company owned by the Central Government and one or more State Governments, means the Central Government;
(iii) in relation to any other State transport undertaking or any local authority, means that Government which has control over that undertaking or authority.
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