Enforced bumper-to-bumper cover won't work logistically or economically: HC

Withdraws its previous order, entrusts lawmakers to examine need for amendment in law on wide coverage of vehicles so as to protect victims

The Madras High Court, in its written order in the bumper-to-bumper insurance cover matter, has said it would not have been economically and logistically feasible to implement its previous order mandating such an insurance cover for all new vehicles sold from September 1 onwards.

Thereby, it has withdrawn its previous order and has entrusted the lawmakers to examine the need for suitable amendment in the law on wide coverage of vehicles so as to protect victims.

The Insurance Regulatory and Development Authority of India (Irdai), the apex body of insurers, has submitted to the court that it 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”.

The General Insurance Council (GI Council), a representative body of general insurers, had moved the high court seeking clarifications on its previous order, which had mandated bumper-to-bumper insurance every year, in addition to covering the driver, passengers, and owner of the vehicle, for a period of five years.

The GI Council wanted to clarify what the court meant by bumper-to-bumper. It wanted to know if the court was referring to package policies--own damage and motor third party--when it said bumper-to-bumper cover. The council had also asked the court to grant the insurers 90 days' time to make changes in the computer system after the insurance regulator's approval.

The GI Council, Irdai, and Society of Indian Automobile Manufacturers (SIAM) submitted that the court’s previous order has an unintended impact, and may cause severe repercussions on the society and therefore, the directions issued by the court should be withdrawn.

Further both GI Council and Irdai assured the court that coverage of uninsured innocent victims, such as gratuitous occupants in a private car and pillion riders will be duly taken care of, which is the anxiety of the court.

The Madras High Court’s order had auto dealers worried, because they feared if it were implemented in letter and spirit, owning a new car would become expensive and this would hurt them even more at a time when the auto industry has been battered by the pandemic. Insurers welcomed the judgment but said the best way forward would be by consulting with the insurance regulator. It would have been a huge positive for the industry given that almost 40 per cent of vehicles are uninsured, according to industry estimates.