Madras High Court withdraws its earlier Order mandating ‘Bumper-to-Bumper’ Insurance of New Vehicle from Sep 1 [Read Order]

Madras High Court - insurance of new vehicle - Taxscan

The Madras High Court has withdrawn its earlier Order mandating  “bumper-to-bumper” insurance of new vehicles from September 1, 2021.

The single-judge bench of Justice S Vaidyanathan said the “direction issued on August 4 this year in paragraph 13 may not be conducive and suitable for implementation in the current situation. Therefore, the said direction in that para is hereby withdrawn for the present.”

Last month, the Madras High Court ruled that “bumper-to-bumper” insurance should be mandatory whenever a new vehicle is sold, from September 1. This must be in addition to covering the driver, passengers, and owner of the vehicle, for a period of five years, the court had held.

The withdrawal was a result of the submissions of the counsels for the Insurance Regulatory and Development Authority of India (IRDAI), General Insurance Company (GIC), and the Society of Indian Automobile Manufacturers (SIAM), a non-profit entity that has been espousing the cause of automobile industry, that the stipulation was impossible to implement.

They submitted that the order mandating the coverage of bumper to a bumper policy may not be logistically and economically feasible for effective implementation in the present legal dispensation. They would have an unintended impact, causing severe repercussions on the society and therefore, the directions issued by this Court may be withdrawn in the interest of the policyholders, automobile industry, and public at large.

Furthermore, they urged that the issue of long term third party insurance coverage has been mandated by the Apex Court as early as September 2018, and the regulating body, IRDAI, has been periodically monitoring the changing scenario from time to time and hence, there is no need for issuance of such compulsory directions.

They said that IRDAI 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, and prayed for suitable modification/withdrawal of the directions issued.

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