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Insurance Liability for Driving License Issues

The document discusses the liability of insurance companies to compensate accident victims if the driver has a fake or invalid license. It outlines relevant sections of the Motor Vehicle Act and case laws establishing that an insurance company must prove the insured was negligent by knowingly allowing an unlicensed driver, and owners are not expected to verify the authenticity of licenses.

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aishrana1111
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9 views3 pages

Insurance Liability for Driving License Issues

The document discusses the liability of insurance companies to compensate accident victims if the driver has a fake or invalid license. It outlines relevant sections of the Motor Vehicle Act and case laws establishing that an insurance company must prove the insured was negligent by knowingly allowing an unlicensed driver, and owners are not expected to verify the authenticity of licenses.

Uploaded by

aishrana1111
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Aish

Intern at ubAdvocate
Email:-aishrana402@[Link]
Contact No: 8791468956

Hello to everyone. Today I’m going to elaborate the points where Insurance
company is liable to compensate for a accident victim in case of a fake/ valid
driving license.
 Certain provisions of Motor Vehicle Act 1988
 Section 3: Necessity for driving licence:- (1) No person shall drive a
motor vehicle in any public place unless he holds an effective driving
licence issued to him authorising him to drive the vehicle
 Section 4 :Age limit in connection with driving of motor vehicles:- (1)
No person under the age of eighteen years shall drive a motor vehicle
in any public place:

Provided that [a motor cycle with engine capacity not exceeding 50cc] may be
driven in a public place by a person after attaining the age of sixteen years.
(2) Subject to the provisions of section 18, no person under the age of twenty years
shall drive a transport vehicle in any public place.
 Section 5 : Responsibility of owners of motor vehicles for
contravention of section 3 and 4 :- No owner or person in charge of a
motor vehicle shall cause or permit any person who does not satisfy
the provisions of section 3 or section 4 to drive the vehicle.
 Section 146 : Necessity for insurance against third party risk
 Section 147 : Requirements of policies and limits of liabilities
 Section 149 : Settlement by insurance company and procedure thereof
 Section 165 :Claims Tribunals
 According to Section 149 (2) of Motor Vehicle Act the breach on the part of
the insured must be willful one being of fundamental condition by the
insured himself and the burden of proof, thereof, would be on the insurer.
With a view to avoid its liabilities it is not sufficient for the insurer to show
that the person driving at the time of accident was not duly licensed but it
must further be established that there was a breach on the part of the insured.
 In United India Insurance Co. Ld. Vs Lehru & Ors. (2003) 3 SCC 338
If the driver produces a driving licence which on the face of it looks genuine,
the owner is not expected to find out whether the licence has in fact been
issued by a competent authority or not. The owner would then take the test
of the driver. If he finds that the driver is competent to drive the vehicle, he
will hire the driver.
If it ultimately turns out that the licence was fake the Insurance Company
would continue to remain liable unless they prove that the owner/insured
was aware or had noticed that the licence was fake and still permitted that
person to drive.
 In National Insurance Co. Ltd. Vs Swaran Singh (2004) 3 SCC 297
It was held that the Insurance company to avoid its liability towards the
insured has to prove that the insured was guilty of negligence and failed to
exercise reasonable care in the matter of fulfilling the condition of the policy
regarding use of vehicles by duly licenced driver or one who was not
disqualified to drive at the relevant time.
 In National Insurance Co. Ltd. Vs (2008) 12 SCC 426
Issue raised: Is owner expected to verify the licence?
Held :- So far as a driving licence of a professional driver is concerned, the
owner of the vehicle, despite taking reasonable carw, might have not been
able to find out as to whether the licence was a fake one or not. He is not
expected to verify the genuineness thereof from the Transport office.
 Pepsu Road Transport Corp. vs National Insurance Co. (2013) 10 SCC
217
 In Skandia Insurance Co. Lts. Vs Kokilaben Chandravadan (1987) ACJ
411 (SC)
It was held that owner is not liable for Negligence of the driver on the way
without knowledge of the owner

So lastly , to conclude my views regarding the liability of insurance


company against the fake/valid driving licence the following points must be
necessary :-
i. Mere absence, fake or invalid driving licence or disqualification of the
driver for driving at the relevant time, are not in themselves defences
available to the insurer against either the insured or the third parties.
ii. To avoid its liability towards insured, the insurer has to prove that the
insured was guilty of negligence and failed to exercise reasonable care
regarding use of vehicles by duly licensed driver or one who was not
disqualifies to drive at the relevant time
iii. The question as to whether the owner has taken reasonable care to
find out as to whether the driving licence produced by the driver( a
fake one or otherwise) will have to be determined in each case.

Disclaimer- “This video is based on YouTube video


[Link] of Jeevan
Prakash,AOR,Supreme Court.”

Common questions

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The Motor Vehicle Act specifies that individuals must be at least 18 years old to drive motor vehicles in public, except for motorcycles with an engine capacity below 50cc, which 16-year-olds can drive. For transport vehicles, the minimum age is 20, ensuring adequate maturity and responsibility .

Proving negligence is significant because only then can an insurer legitimately deny liability. The insurance company must demonstrate that the insured failed to exercise reasonable care, such as not ensuring the driver had a valid license, as determined in National Insurance Co. Ltd. Vs Swaran Singh. This requirement ensures that insurers cannot escape liability through technicalities but must focus on actual oversight or willful negligence by the insured .

In the case of United India Insurance Co. Vs Lehru, the courts held that if a driver presents what appears to be a genuine driving license, the insurance company remains liable unless they can prove the owner was aware of the license's falsity. This decision reflects that owners are not expected to verify the validity of a professional driver's license independently .

Under Section 149 (2) of the Motor Vehicle Act, an insurance company must demonstrate that the breach of conditions by the insured was willful to avoid liability. It is insufficient for the insurer to show that the driver lacked a valid license; they must prove the owner's complicity or negligence in allowing an unlicensed person to drive. The precedent set in United India Insurance Co. Vs Lehru clarifies that an owner is not expected to verify the authenticity of a driving license if it appears genuine, unless they have reason to suspect otherwise .

Section 146 mandates that vehicle owners must have insurance that covers liabilities to third parties in case of accidents. This provision aims to ensure victims receive compensation regardless of the driver's licensing status, safeguarding public welfare by holding insurers accountable except in cases of proven negligence by the insured .

An insurance company can avoid liability only if it is demonstrated that the insured was negligent or willfully ignored the condition requiring the driver to have a valid license. This was emphasized in National Insurance Co. Ltd. Vs Swaran Singh, where mere absence of a valid license is not enough for an insurer to avoid liability without proving the insured's negligence .

Section 3 of the Motor Vehicle Act stipulates that no one shall drive a motor vehicle on public roads without holding a valid license issued for the specific type of vehicle. This regulation is foundational in determining legal accountability and insurance liability in cases of accidents .

The ruling in Skandia Insurance Co. Ltd. Vs Kokilaben Chandravadan established that an owner is not liable for a driver's negligence if the owner was unaware of such negligence. This clarified that the onus of proving owner negligence falls on the insurance company, ensuring owners are not unfairly penalized for driver errors unknown to them .

Section 5 imposes a duty on vehicle owners to ensure that they do not allow individuals who do not meet the requirements of Sections 3 and 4, such as lacking a valid license, to drive. This section holds owners accountable for compliance with licensing laws, impacting how employers vet potential drivers .

Court cases like United India Insurance Co. Vs Lehru and National Insurance Co. Ltd. Vs (2008) determine that vehicle owners are not generally expected to verify the authenticity of a driver’s license beyond a superficial check unless there are overt reasons to suspect its validity. The courts highlight that the responsibility primarily lies in reasonable care and not in exhaustive verification processes with transport authorities .

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