A comprehensive motor policy covers the vehicle owner as an occupant despite not being a third party.

On 23 July 2013, Gurcharan Singh was travelling in his Wagon-R, Registration No. JK12-5891, from Poonch to Jammu when the vehicle met with an accident near Chingus on the Jammu–Poonch National Highway due to the rash and negligent driving of its driver. Singh suffered a comminuted fracture of the left humerus and was assessed as having 50% disability.

He filed a claim petition before the Motor Accident Claims Tribunal, Poonch. The insurer denied liability, contending that the driver did not possess a valid driving licence, that the vehicle was used in breach of the policy conditions, and that Singh, being the owner of the vehicle, was not a “third party” entitled to compensation.

The Tribunal awarded Rs. 5,70,000 with interest at 7.5% per annum, comprising medical expenses, boarding and lodging, special diet, pain and suffering, and future treatment.

The insurer challenged the award under Section 173 of the Motor Vehicles Act, 1988.

1. Whether the owner of an insured vehicle, who sustained injuries while travelling as an occupant in the vehicle and was not driving it, could claim compensation under the applicable comprehensive/package insurance policy.

2. Whether the compensation of Rs. 5,70,000 awarded by the Tribunal was excessive or otherwise liable to interference.

The Court applied Section 173 of the Motor Vehicles Act, 1988, governing appeals against awards of the Motor Accident Claims Tribunal.

It recognised the general principle that the owner of a vehicle is not ordinarily a “third party” for purposes of compulsory third-party liability coverage.

However, it held that the scope of liability must be determined from the terms of the insurance policy and the premium paid.

The Court relied on the policy’s additional premium for personal accident coverage for five persons and on National Insurance Company Ltd. v. Smt. Thungala Dhana Laxmi, 2026 INSC 793, which, referring to the IRDA circular dated 16 November 2009 and Surekha v. Santosh, (2021) 16 SCC 467, recognised that a comprehensive/package policy covers occupants of the insured vehicle.

Under such coverage, an occupant includes a person inside, entering, or exiting the vehicle.

Although Gurcharan Singh was the owner and therefore would not ordinarily qualify as a third party, the Court found that he was travelling as an occupant and was not driving the vehicle.

The insurance policy was comprehensive and included Rs. 100 towards compulsory personal accident coverage and Rs. 250 as an additional premium for personal accident coverage of five persons; the vehicle had a seating capacity of five, and there was no allegation that the capacity was exceeded.

Applying the principle that a package policy extends coverage to occupants, the Court held that the insurer could not deny liability merely because the injured claimant was also the vehicle’s owner.

The Court further found no basis to interfere with the quantum, as the claimant was a pensioner, no amount had been awarded for loss of income, and the amounts awarded towards medical and related expenses were neither excessive nor exorbitant.

The appeal was dismissed as meritless.

The Insurance Company was directed to satisfy the Tribunal’s award and deposit the awarded amount before the Registry within two months, if not already deposited, for release to the claimant upon proper identification and verification.