When an insurer has issued a certificate of insurance in respect of a contract of insurance between the insurer and the insured person, then—
(a) if and so long as the policy described in the certificate has not been issued by the insurer to the insured, the insurer shall, as between himself and any other person except the insured, be deemed to have issued to the insured person a policy of insurance conforming in all respects with the description and particulars stated in such certificate; and
(b) if the insurer has issued to the insured the policy described in the certificate, but the actual terms of the policy are less favourable to persons claiming under or by virtue of the policy against the insurer either directly or through the insured than the particulars of the policy as stated in the certificate, the policy shall, as between the insurer and any other person except the insured, be deemed to be in terms conforming in all respects with the particulars stated in the said certificate.
Simplified Explanation
Section 156 of the Motor Vehicles Act in India pertains to the effect and importance of a certificate of insurance. This section clarifies how the certificate acts as proof of insurance coverage and details its legal implications concerning the insured vehicle and third-party claims.
Overview of Section 156
The certificate of insurance is a legal document issued by an insurer, certifying that a vehicle owner or driver has an insurance policy that complies with the requirements of the Motor Vehicles Act. Section 156 specifies that this certificate serves as conclusive evidence of the existence of an insurance policy, making it a crucial document in case of any motor vehicle accident or claim.
Key Elements of Section 156
- Proof of Insurance:
- The certificate of insurance acts as conclusive evidence that the vehicle in question is insured under a valid policy. This means that once a certificate is issued, it is legally accepted as proof that the vehicle has insurance that covers third-party risks.
- Binding on Insurer:
- Even if there are internal disputes between the insured and the insurer, or if the insurer later discovers issues with the insurance agreement (such as misrepresentation or non-payment of premiums), the certificate is binding on the insurer. The insurer cannot deny third-party claims on the basis that the insurance contract was flawed or invalid if a valid certificate has been issued.
- Limits of Liability:
- While the certificate proves the existence of insurance coverage, it does not automatically mean unlimited liability for the insurer. The insurer is still bound by the terms, conditions, and limits specified in the insurance policy, particularly for claims involving third-party liability.
- Enforcement of Third-Party Claims:
- If a motor vehicle accident occurs and results in third-party damage or injury, the existence of the certificate ensures that the third party can file claims directly against the insurer. This simplifies the claims process and ensures compensation for victims, regardless of disputes between the insurer and the insured.
Practical Implications
- Legal Recognition: The certificate of insurance is legally recognized by authorities as proof that the vehicle meets the statutory requirement for third-party insurance under the Motor Vehicles Act.
- Simplified Claims Process: In the event of an accident, victims or claimants can pursue claims directly from the insurer without needing to get involved in any potential disputes between the vehicle owner and the insurer.
- Responsibilities of Insurers: Insurers must issue the certificate carefully and maintain accountability, as they cannot easily avoid liability once the certificate has been provided, even if internal policy issues arise.
- Traffic Enforcement: Law enforcement authorities can demand the certificate of insurance during traffic stops, accidents, or registration renewals to verify compliance with third-party insurance requirements.
Conclusion
Section 156 of the Motor Vehicles Act highlights the importance of the certificate of insurance as a binding and conclusive legal document, ensuring that vehicles on the road have the necessary third-party insurance coverage. By making this certificate the primary proof of insurance, the Act facilitates smoother compensation processes for third-party claims, while also holding insurers accountable for providing coverage as per the certificate’s terms. This provision protects both third-party victims and insured individuals by ensuring that insurance policies serve their intended purpose in motor vehicle accidents.
