An Act-only motor policy does not cover a gratuitous passenger absent additional premium.

On 16 December 2006, Diwakar Singh, aged about 39, was travelling in a Jeep owned by Mahipat Singh and driven by Bhupendra Singh when it met with an accident.

Singh sustained a fracture to his left leg and brought a claim under Section 166 of the Motor Vehicles Act, 1988.

The Tribunal awarded compensation against the owner and driver but exonerated the insurer.

The owner and driver appealed, seeking to shift liability to the insurer; the claimant appealed for enhancement.

The insurer maintained that the Jeep had an Act Policy and that no additional premium covered passenger risk.

1. Whether the insurer was liable for compensation to a claimant travelling as a gratuitous or non-paying passenger in a vehicle insured under an Act Policy, where no premium had been paid to cover passenger risk.

2. Whether the claimant was entitled to enhancement of compensation for his injuries and their consequences, notwithstanding that permanent disability had not been established.

The Court considered Sections 166 and 173(1) of the Motor Vehicles Act, 1988, governing the claimant’s compensation claim and the appeals, respectively.

It applied the principle that an insurer’s contractual liability does not extend beyond the risks covered by the policy; an Act Policy without premium for passenger risk does not cover a gratuitous or non-paying passenger.

In assessing compensation, the Court distinguished permanent disability from temporary impairment and held that the absence of established permanent disability does not preclude compensation for injury-related pain, suffering, temporary impairment, and attendant consequences.

The claimant was an occupant of the Jeep, and the owner and driver themselves described him as having taken a lift.

The policy was an Act Policy, and no premium had been paid to cover passenger risk; accordingly, the insurer’s liability could not be enlarged beyond the policy’s coverage, and the Tribunal was justified in placing liability on the owner and driver.

As to enhancement, the claimant’s fracture, treatment at different hospitals, and surgery involving a steel plate warranted additional compensation.

Although the disability certificate was limited to three years and did not establish permanent disability, the temporary impairment and resulting pain and suffering remained compensable.

It awarded an additional lump sum of ₹55,000, with interest at 6% per annum from the date of the claim application until realization, payable jointly and severally by the owner and driver; the insurer remained exonerated.