Two-Wheeler Bundled Insurance Policy covers liability towards pillion riders as third parties.

On 11.11.2020, one Rahamathulla died after the two-wheeler he was riding as a pillion hit a reflector board due to the rider's (4th Respondent) negligence

The legal heirs (Respondents 1-3) filed for compensation under M.C.O.P. No. 947 of 2021.

The Motor Accident Tribunal, Coimbatore, found the Insurance Company (Appellant) liable but granted it "pay and recover" rights against the vehicle owner, citing a violation of policy conditions as it was considered an "Act Only Policy"

The Appellant challenged this, contending that an "Act Only/Bundled Policy" does not cover a pillion rider

1. Whether a "Two-wheeler Bundled Policy" introduced under the 2018 regime covers liability for the death or injury of a pillion rider

2. Whether the Insurance Company is liable to indemnify the owner or if the "pay and recover" order was appropriate

The Court applied the principles governing Motor Insurance Polices, specifically distinguishing between "Act Only" policies and the "Two-wheeler Bundled Policy" regime introduced in 2018

It relied on National Insurance Company Ltd. vs. Balakrishnan and Another (2012) regarding the coverage of occupants in "Comprehensive/Package" policies

Crucially, the court interpreted "Section II – Liability to Third Parties" of the standard Bundled Policy terms, which defines "Third Party" to include occupants (pillion riders) provided they are not carried for hire or reward

The Court noted that the "Two-wheeler Bundled Policy" is a distinct, proactive insurance regime introduced in 2018 to ensure longer-term coverage and prevent liability gaps

Upon perusing the specific policy (Ex.B.1), the Court found that Section II (Liability to Third Parties) explicitly states the insurer will indemnify against sums the insured is legally liable to pay regarding death or bodily injury to "any person including occupants carried in the insured vehicle"

The Court reasoned that since the accident occurred within the policy period and the pillion rider is qualifies as an "occupant" under Section II, the risk is fully covered

Consequently, the Tribunal’s finding that there was a "violation of policy conditions" warranting a "pay and recover" order was factually and legally incorrect under the new Bundled Policy terms

The High Court dismissed the Insurance Company's appeal and set aside the "pay and recover" direction; the Appellant/Insurance Company is directed to deposit the full compensation amount awarded by the Tribunal (without the right to recover from the owner) within six weeks.