Extra members in vehicle does not vitiate the insurance claim

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In a goods vehicle carrying products or other items, the insurance contract always include the clause with regard to the number of passengers or persons it could carry. However, more often than not, the driver or some-times even the owner carry extra person in the vehicle. While this may not affect the vehicle directly, the problem arises when there is accident of the vehicle.

Carrying extra person in the vehicle is technically breach of contract and in-effect, the insured would be liable to loose insurance policy. When the vehicle meets with an unfortunate accident, the insurance company, as per the contract would repudiate the claim on the ground of extra member in the vehicle.

The judgment of the Supreme Court in the case of Lakshmi Chand v. Reliance General Insurance has come as a huge respite for such claimants. While the Apex Court has held that, when there are extra persons in the vehicle than agreed under the insurance contract by the insured, it does violate and breach insurance agreement, it is not in-itself a Fundamental breach of Agreement so as to vitiate the entire claim of the claimant.

The insurance company in order to repudiate the claim on this ground is required to prove that the accident was the direct cause and result of the excess members in the vehicle and when the accident has been caused due to fault of other vehicle or for any other person, the insurance company, solely on the ground that during accident, more persons were in the vehicle in the breach of insurance-agreement cannot reject the insurance claim. While, this judgment does not mean that the insured should willingly breach the conditions of insurance-contract, however when there is some lapse and a person or more have been added to the vehicle when there is accident and it is not the cause of the accident, the insurance company cannot reject the claim on this ground alone and is liable to compensate the insured.

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