SC eases insurance rules to aid professionals

NEWDELHI: Insurance companies will now have to shell out more in terms of compensation payable to road accident victims as the Supreme Court on Tuesday cleared an anomaly in the law that discriminated between victims with permanent jobs versus those who are self employed.

Elucidating on the principle of ‘just compensation’ for road accident victims, a five judge constitution bench ruled that from here on, courts, while fixing compensation payable by insurance com- panies to self-employed persons such as doctors, sportspersons or persons with permanent salaries, will add a maximum of 40% of their salary to their annual income as fixation of future prospects. Future prospect is a sum of money that is added by courts to the annual income of a person while deciding on the quantum of compensation to a road accident victim.

The five-judge bench was hearing a petition where the main issue was what the addition as regards the future prospects should be in cases “where the deceased was self-employed or was a person on fixed salary without provision for annual increment, etc”.

The bench comprising Chief Justice Dipak Misra and justice AK Sikri, justice AM Khanwilkar, justice DY Chandrachud and justice Ashok Bhushan was

IN MOTOR VEHICLE ACCIDENT CLAIM CASES, THE AGE OF THE VICTIM, INCOME AND FUTURE PROSPECTS DETERMINE THE COMPENSATION 2015

2016 2017 till Oct

hearing a reference by a twojudge bench in the National Insurance Company Limited v. Pushpa case to resolve the conflicting opinion between the three-judge bench judgments.

In motor vehicle accident claim cases, the age of the victim, income and future prospects are the important factors that determine the compensation to be paid by the insurance company.

The court said, “To follow the doctrine of actual income at the time of death and not to add any amount with regard to future prospects to the income for the purpose of determination of mul- tiplicand would be unjust.

“The determination of income while computing compensation has to include future prospects so that the method will come within the ambit and sweep of just compensation as postulated under the law.”

It added, “To state that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite.”

Attempts to reach out to National Insurance Company by Hindustan Times were in vain.