Madras High Court· 28 July 2026

Can personal accident cover under a motor policy be claimed by a third party through a petition under Section 166 of the Motor Vehicles Act, 1988?

Cholamandalam MS General v. U.Durga

2026:MHC:3113 · CMA.No.3009 of 2025
Coram: Justice N.Anand Venkatesh

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Answer

No. The liability of an Insurance Company may be a contractual liability arising out of a policy or a statutory liability arising out of the provisions of the Act; personal accident cover is contractual, so the court has to look into the terms and conditions of the contract. As the policy covers only the owner of the vehicle or at best his or her legal representatives, and the Insurance Company has no privity of contract with a third party, a petition under Section 166 cannot be maintained to make such a claim.

Headnote

Motor Vehicles Act, 1988 — s.166 — Personal accident cover — Owner-cum-driver — Borrower of vehicle — Privity of contract — Maintainability — Motor Vehicles Act, 1988 — s.166 — Personal accident cover confined to the insured — Held: A combined reading of the terms of the policy and IMT-15 confines personal accident cover to the insured named in the policy or his or her legal representatives, that is, the registered owner-cum-driver of the insured motor vehicle. (¶22, 24) Motor Vehicles Act, 1988 — s.166 — Borrower a third party — No privity of contract — Held further: A borrower of the vehicle is a third party, and authorisation by the owner to use the vehicle creates no entitlement in his legal representatives to personal accident cover; the Insurance Company has no privity of contract with such a third party. (¶27, 28) Motor Vehicles Act, 1988 — s.166 — Claim petition not maintainable — Award unsustainable — Held further: Since only the contractual liability applies, a petition under Section 166 cannot be maintained to make such a claim, and an award mulcting that liability on the Insurance Company is unsustainable. Appeal allowed; award set aside. (¶28, 29)

In the Court's own words

Paragraph 27However, in the case in hand, the borrower of the vehicle is a third party and just because he has been authorized by the owner of the vehicle to use his vehicle, that will not, in any way, create an entitlement to the borrower of the vehicle or his/her legal representative(s) to make a claim under the personal accident cover by filing a petition under Section 166 of the Act.

Paragraph 28The liability of the Insurance Company may be in the nature of contractual liability arising out of a policy or a statutory liability arising out the provisions of the Act. In the case in hand, only the contractual liability will apply and therefore, the Court has to look into the terms and conditions of the contract. The policy covers only the owner of the vehicle or at best his/her legal representative(s) when it comes to personal accident cover. By no stretch, the personal accident cover can be extended to a third party or his/her legal representative(s). Ex consequenti, a petition under Section 166 of the Act cannot be maintained to make such a claim. If such claims are entertained, any third party, who suffers an accident because of his own negligence, will start claiming compensation under the personal accident cover, which is meant only for the owner of the vehicle, in whose name, the policy has been issued. This interpretation of the policy runs against the intent between the parties regarding the liability under the personal accident cover. The Insurance Company does not have any privity of contract with the third party or his/her legal representative(s) when it comes to payment of the fixed amount under the personal accident cover.

Acts & Sections

s.166 Motor Vehicles Act, 1988s.163A Motor Vehicles Act, 1988Rule 3 Central Motor Vehicles Rules, 1989

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Also decided in this judgment

Whether the claim petition can be maintained by the legal heirs of the deceased, who borrowed the vehicle from its owner, for claiming the personal accident cover?

Plain-language answer prepared by the LexStreak Editorial Desk — verify against the judgment. Source: Madras High Court. Corrections