Personal Accident Cover Is Restricted to the Named Insured and Does Not Extend to Vehicle Borrowers.

On 18.09.2021, the deceased B. Uma Shankar was riding a two-wheeler on the Ambur–Vellore NH Road near Pallikonda at about 7:40 PM when a stray dog darted across his path; he applied the brake, lost balance, fell, sustained fatal injuries, and succumbed on 21.09.2021

The deceased had borrowed the vehicle from its registered owner, one Karthik Murali Muralidharan, who was the insured under the policy issued by the appellant–Insurance Company

The deceased's wife (R1), minor children (R2 & R3), and father (R4) filed a claim petition under Section 166 of the Motor Vehicles Act, 1988 before the Motor Accident Claims Tribunal, Chennai, claiming personal accident cover of Rs.15 lakhs; the owner of the vehicle was not impleaded

The Insurance Company contested on grounds of absence of privity of contract with the deceased, non-maintainability of a contractual personal accident claim before the Tribunal, and non-joinder of the owner

The Tribunal held that the borrower stepped into the shoes of the owner and awarded Rs.15 lakhs with interest at 7.5% per annum from the date of petition till realization

The Insurance Company appealed under Section 173 of the Act

1. Whether a claim petition under Section 166 of the Motor Vehicles Act, 1988 is maintainable by the legal heirs of a deceased borrower of a vehicle for claiming the personal accident cover under the motor insurance policy

2. Whether the personal accident cover meant for the owner-cum-driver can be extended to a third-party borrower of the vehicle or his legal representatives

Section 166 of the Motor Vehicles Act, 1988, distinguishing claims founded on statutory liability under the Act from those founded on contractual liability arising from the policy, holding that where only contractual liability applies, the terms and conditions of the contract govern

Section III of the policy (Ex.R2), which conditions personal accident cover on the owner-driver being (i) the registered owner, (ii) the insured named in the policy, and (iii) a holder of an effective driving licence

IMT-15, which confines personal accident cover to the insured or any named person, payable directly to the injured person or his/her legal representative(s)

The Court reasoned that a combined reading of the policy terms and IMT-15 demonstrates that personal accident cover is confined to the insured named in the policy or his/her legal representatives, whose receipt alone operates as a full discharge

Extending such cover to a third-party borrower would defeat the very objective of the personal accident cover, which runs with the registered owner

Unlike Vasuki, where the driver was the husband of the owner, the borrower here was a stranger; mere authorization by the owner to use the vehicle creates no entitlement in the borrower or his legal heirs to claim under the personal accident cover via Section 166

Since the claim rested purely on contractual liability, the Court examined the contract and found no privity between the insurer and the borrower or his legal representatives regarding the fixed personal accident sum

The Court further noted the floodgates concern — entertaining such claims would permit any negligent third-party user to claim a cover meant exclusively for the named insured — and emphasized that the claimants had not even impleaded the vehicle owner, who was unaware of the claim

The appeal was allowed and the award dated 24.07.2024 in MCOP No. 1275 of 2022 was set aside. The Court directed that the amount of Rs.7.50 lakhs, deposited by the Insurance Company pursuant to the interim stay order dated 23.10.2025 in C.M.P. No. 25412 of 2025, be permitted to be withdrawn together with accrued interest