Transfer of vehicle ownership does not, by itself, extinguish subsisting insurance coverage.

On 23 June 2017, the claimant was injured when his motorcycle collided with a Santro car near village Kotdi; an FIR was registered against the car’s driver.

The claimant sought compensation under Section 166 of the Motor Vehicles Act, 1988.

The Motor Accident Claims Tribunal awarded ₹1,05,390 with 9% interest but exonerated the insurer because the car had changed ownership during the policy period and the transfer had not been effected with the insurer.

The claimant appealed under Section 173, challenging the insurer’s exoneration.

Whether the transfer of the insured vehicle during the policy period, without cancellation of the policy by the insurer, relieved the insurer of liability to indemnify the new owner for the accident.

Whether the Tribunal’s award should be modified to make the insurer jointly and severally liable while maintaining the compensation awarded.

The appeal was brought under Section 173 of the Motor Vehicles Act, 1988, and the compensation claim had been made under Section 166.

A running insurance policy covering the vehicle does not ipso facto cease upon transfer of ownership; where the insurer has not cancelled the policy, the purchaser steps into the previous owner’s position and the insurer remains liable to indemnify the risk.

No precedent was cited.

The policy was effective and covered the vehicle on the date of the accident.

The insurer identified no statutory provision supporting the Tribunal’s conclusion that the ownership transfer, by itself, ended coverage; nor had the insurer cancelled the policy by notifying the former or new owner.

Applying the principle that the policy continued to cover the vehicle and that the purchaser assumed the prior owner’s position, the Court found the insurer liable.

It found no basis to disturb the amount of compensation awarded.

The insurer was held jointly and severally liable with opponent Nos. 1, 2.1 and 2.2, and was directed to deposit the decretal amount with 9% annual interest from the date of the claim petition until realisation within eight weeks of receiving the order.