BLOW TO insurance firms

New Delhi, Aug. 29: The Supreme Court has held that an insurance company is liable to pay compensation for an accident even if the driver of the insured vehicle does not have a valid driving licence.

A bench headed by Justice A.R. Lakshmanan said the insurance company can recover the compensation paid to a person/persons injured in an accident from the owner of the vehicle only if it is proved that he/she knew the driver did not have a valid licence.

The court, however, added that the owner of a vehicle is not expected to find out whether the licence held by his driver had been issued by a competent authority.

The ruling was passed while setting aside a Punjab and Haryana High Court order allowing Oriental Insurance Company to recover a Rs 2.7-lakh compensation from a truck-owner for an accident caused by rash and negligent driving by his employee who did not have a valid licence.

The apex court said that there was no evidence to show that the truck-owner knew his driver did not possess a valid licence.

He had checked his licence and driving skills before employing him, it added.

If a driver produces a licence, which on the face of it looks genuine, the owner is not expected to verify whether it had been issued by a competent authority, the court said.

According to the law, an insurance company can claim back the compensation amount only if the terms and conditions in the insurance policy are violated.

All vehicle owners are bound to have at least a third-party insurance so that people can be compensated for injuries or damages suffered because of accidents.