Madras HC withdraws its order on bumper-to-bumper insurance cover

The Madras High Court has withdrawn its earlier order directing insurance companies to ensure bumper-to-bumper insurance for five years for new vehicles sold from September 1, 2021, after IRDA and others submitted it was impossible to implement the directive.

The withdrawal follows the submissions of the counsels for the Insurance Regulatory and Development Authority of India (IRDAI), General Insurance Company (GIC) and the Society of Indian Automobile Manufacturers (SIAM), a non-profit entity that has been espousing the cause of automobile industry, that the stipulation was impossible to implement.

"This court feels that the direction issued on August 4 this year in paragraph 13 may not be conducive and suitable for implementation in the current situation. Therefore, the said direction in that para is hereby withdrawn for the present," Justice S Vaidyanathan said on Monday .

The judge hoped and trusted the lawmakers would look into this aspect and examine the need for suitable amendment in the Act relating to wide coverage of vehicles so as to protect the innocent victims. In view of withdrawal of the direction, the circular dated August 31 issued by the Joint Transport Commissioner in this connection also stands cancelled, the judge said.

IRDAI, GIC and SIAM stated the views expressed by the judge on August 4 in respect of protective coverage to uninsured innocent victims, such as gratuitous occupants in a private car and pillion riders, will be duly taken care of in consultation with IRDAI to safeguard the interest of innocent victims, which was the judge''s anxiety.

They submitted that the order mandating the coverage of bumper to bumper policy may not be logistically and economically feasible for effective implementation in the present legal dispensation. They would have unintended impact, causing severe repercussions on the society and therefore, the directions issued by this Court may be withdrawn in the interest of the policyholders, automobile industry and public at large.

They also brought to the notice of the judge that the issue of long term third party insurance coverage has been mandated by the Apex Court as early as in September, 2018, and the regulating body -- IRDAI, has been periodically monitoring over the changing scenario from time to time and hence, there is no need for issuance of such compulsory directions.

They said that IRDAI will consider better and fuller insurance coverage to all unfortunate victims, be it drivers, owners or gratuitous occupants or pillion riders, as the case may be, and prayed for suitable modification/withdrawal of the directions issued.

"Considering the overall submissions made by the parties, including the counsels and taking into account the concern of the IRDAI, this court feels that the direction issued by this Court on August 4 in para No13 may not be conducive and suitable for implementation in the current situation. Therefore, the said direction is hereby withdrawn for the present," the judge said.

Last month, the Madras High Court ruled that "bumper-to-bumper" insurance should be mandatory whenever a new vehicle is sold, from September 1. This must be in addition to covering the driver, passengers and owner of the vehicle, for a period of five years, the court had held.