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Insurance companies responsible for compensation in absence of driver's license: Karnataka High Court

The Karnataka High Court has ruled that insurance companies must compensate victims in road accidents involving drivers without proven licenses. The court held an insurance company responsible initially, allowing recovery from the vehicle owner later. The decision sets a precedent, emphasizing compliance with licensing requirements and proper documentation in road safety.

Insurance companies responsible for compensation in absence of driver's license: Karnataka High Court vkp
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First Published Jan 30, 2024, 11:39 AM IST

The Karnataka High Court has determined that insurance companies must bear the responsibility of compensating victims in the event of a road accident where the deceased driver's license is not proven. The court ordered that the compensation be initially paid by the insurance company and later recovered from the vehicle owner under the 'payment and recovery' policy.

The decision stems from a petition filed by an insurance company challenging the directive of Chitradurga Labor Officer and Workers' Compensation Commissioner, who had assigned compensation responsibility to the insurance company for a lorry driver involved in a fatal road accident.

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Justice T. G. presided over the case, emphasizing the absence of the driver's license at the accident scene and the lack of evidence supporting the possession of a valid license by the deceased. The insurance company argued that the owner was at fault for allowing the driver to operate the lorry without a valid license, thus making the owner liable for compensating the victims.

The High Court, upon careful consideration, confirmed the existence of an employer-employee relationship between the lorry owner, SM Nooruddin, and the deceased driver. Despite claims from the deceased's family asserting the possession of a driving license, no concrete proof was presented.

The court clarified that the 'payment and recovery' policy would be applicable if it remained unproven that the deceased had a valid driving license. Consequently, it directed the insurance company to promptly pay the compensation amount to the family of the deceased, with the provision that the company could recover this amount from the lorry owner.

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The case involves Faus, a lorry driver employed by SM Nooruddin, who tragically lost his life in a road accident near Adakamaranahalli in Chitradurga in 2008. The court awarded compensation of ₹4,23,580 to the deceased's family, with an annual interest rate of 12%. This order was contested by the insurance company, prompting their appeal to the Karnataka High Court.

This groundbreaking ruling establishes a precedent where insurance companies are held directly accountable for compensating victims in the absence of a valid driver's license, emphasizing the crucial role of ensuring proper documentation and compliance with road safety regulations. 

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