A package policy covering passengers indemnifies the vehicle owner travelling as a passenger.

On 17.01.2008, a Tata Spacio bearing registration No. UA-07M-5553 met with an accident near Village Padagali, District Tehri Garhwal, resulting in the death of Laxman Singh, the vehicle’s owner.

At the time of the accident, the vehicle was being driven by respondent no. 2, Makan Singh, while Laxman Singh was travelling in it as an occupant. His wife, mother and three minor children filed a claim petition seeking compensation of ₹11,25,000.

The Motor Accidents Claims Tribunal found that the accident was caused by the rash and negligent driving of respondent no. 2 and found no breach of the insurance policy.

However, it dismissed the claim on the ground that the deceased was the owner of the vehicle and therefore was not a “third party” entitled to indemnification under the policy.

The Court applied the principle that an owner is ordinarily not a “third party” and, absent specific contractual coverage, an insurer is not liable for the owner’s own death, as recognised in Dhanraj v. New India Assurance Co. Ltd., (2004) 8 SCC 553, and Oriental Insurance Co. Ltd. v. Jhuma Saha, (2007) 9 SCC 263.

However, liability must ultimately be determined by the terms of the particular insurance policy. A comprehensive or package policy that expressly covers occupants/passengers, supported by a separately charged premium, must be given effect according to its terms.

The Court relied on National Insurance Co. Ltd. v. Smt. Thungala Dhana Laxmi, 2026 SCC OnLine SC 1486, concerning coverage of occupants under a comprehensive/package policy.

For quantification, the Court applied Laxmi Devi v. Mohammad Tabbar, (2008) 12 SCC 165 for assessment of notional income, National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 for future prospects, and Sarla Verma v. Delhi Transport Corporation, (2009) 6 SCC 121 for deduction towards personal expenses and selection of the multiplier.

Compensation under consortium and conventional heads was also awarded in accordance with the applicable motor accident compensation principles.

The High Court upheld the Tribunal’s findings that the accident resulted from the rash and negligent driving of respondent no. 2 and that there was no breach of the policy conditions.

Nevertheless, it held that the Tribunal had wrongly treated the deceased’s ownership of the vehicle as conclusive against the claim.

Unlike the policies considered in Dhanraj and Jhuma Saha, the policy in the present case was a “Passengers Carrying Commercial Vehicle Policy B Package” covering nine passengers, for which a specific premium of ₹2,115 had been charged.

The policy also separately covered one employee under workmen’s compensation.

Since the deceased was not driving the vehicle but was travelling in it, his status as an occupant/passenger could not be disregarded merely because he owned the vehicle.

The express passenger coverage therefore extended to him, and the insurer could not avoid liability solely on the basis of his ownership.

For computation, the Court assessed his monthly notional income at ₹3,000, added 40% towards future prospects, deducted one-fourth for personal expenses in view of five dependants, and applied the multiplier of 16 applicable to a 33-year-old deceased.

This resulted in a loss of dependency of ₹6,04,800, supplemented by consortium and conventional damages.

The Court held that the deceased’s ownership of the vehicle did not defeat the claim because he was travelling as an occupant and the package policy expressly covered liability towards nine passengers.

The claimants were awarded total compensation of ₹8,34,800, comprising ₹6,04,800 for loss of dependency, ₹2,00,000 towards consortium, ₹15,000 for loss of estate and ₹15,000 for funeral expenses.

The amount was directed to carry interest at 7% per annum from the date of filing of the claim petition until realization, and respondent no. 1, the Insurance Company, was directed to deposit the amount before the Tribunal within eight weeks, following which it was to be released to the claimants.