Burden of Proof on Insurer: Kerala High Court Affirms Insurer's Duty to Prove 'Act Only Policy' to Escape Full Liability in Motor Accident Claims - 2025-04-07

Kerala High Court Upholds Insurer's Liability in 30-Year-Old Motor Accident Case, Emphasizing Burden of Proof for 'Act Only Policy'

Ernakulam, Kerala – In a judgment delivered on February 10, 2025, the High Court of Kerala, presided over by Honourable Justice C. Pratheep Kumar , addressed a series of appeals stemming from a 1994 motor vehicle accident. The core issue revolved around whether United India Insurance Company Limited, the insurer of a Maruti car involved in the accident, was liable to indemnify the compensation awarded to the passengers of the car.

Case Background: A 1994 Collision and Subsequent Claims

The case originates from a collision between a Maruti car and an Ambassador car on May 28, 1994. The accident resulted in injuries to multiple passengers and the unfortunate death of one, Salim , a Maruti car passenger. Several claim petitions were filed before the Motor Accident Claims Tribunal (MACT), Mavelikkara, leading to various awards and subsequent appeals brought before the High Court.

The Central Dispute: Insurance Coverage and 'Act Only Policy'

United India Insurance Company Limited, the appellant in several appeals, argued that the Maruti car held only an 'act only policy'. They contended that this type of policy does not cover the risk to gratuitous passengers, thus exempting them from liability for compensation claims from the Maruti car's passengers – specifically, claims from the legal representatives of the deceased Salim , and from Jeena Rani , Salim 's wife, who was injured in the accident, and Imtiaz , another injured passenger.

The crux of the insurer's argument was their limited liability due to the nature of the insurance policy. Conversely, the respondents, including the owner of the Maruti car and the claimants, argued that the insurer had admitted to a valid policy and failed to prove the limitations of an 'act only policy' by not producing the policy document in court.

Arguments and Court's Reasoning: Burden of Proof Lies with the Insurer

The High Court critically examined the insurer's claim regarding the ‘act only policy’. The court noted that while the insurer claimed limited liability, they failed to produce the insurance policy document itself as evidence before the MACT or during the appeals process.

Justice C. Pratheep Kumar emphasized a well-established legal principle, citing precedents from the Supreme Court and the Kerala High Court itself, which places the burden squarely on the insurance company to prove any policy limitations.

> "From the above discussions and settled legal positions, it can be seen that the burden is on the insurer to prove that the policy issued by them is only an ‘act only policy’ and that it does not cover the entire claim raised by the claimants. In the instant case, the insurer of the Maruti car has not produced even a copy of the insurance policy before the Tribunal. No attempt was also made by them to discharge the above burden."

The court highlighted that the insurer initially even contradicted themselves, first denying the policy's existence and later claiming it was 'act only' but still failing to produce it. The court rejected the insurer's attempt to introduce a photocopy of the policy late in the proceedings, asserting that it did not constitute proper legal proof.

Judgment and Implications: Relief for Claimants, Costs for Insurer

Ultimately, the High Court dismissed the appeals filed by United India Insurance Company in MACA 1693/2008 and MACA 1694/2008, thereby upholding the insurer's liability to compensate the claimants in OP(MV) 1379/1994 and OP(MV) 1380/1994.

In a significant relief to Imtiaz , the court allowed MACA 2532/2009 in part, setting aside the MACT's dismissal of OP(MV)1378/94 and awarded him a compensation of ₹1,32,000, directing the insurance company to pay. Similarly, in MACA 2324/2009, the court enhanced the compensation for Jeena Rani to ₹17,34,974, recognizing the severity of her injuries and disability, and again directed United India Insurance to pay.

However, MACA 2323/2009, filed by Jeena Rani seeking separate compensation for her deceased husband, was dismissed as the compensation for Salim 's death had already been considered in OP(MV).1379/1994.

The judgment underscores the critical importance for insurance companies to formally present and prove policy limitations when attempting to restrict liability in motor accident claims. It reinforces the principle that the burden of proof lies with the insurer to demonstrate exclusions or limitations within their policies, rather than expecting claimants to disprove them. This ruling provides clarity and reinforces the protection afforded to victims of motor accidents under the Motor Vehicles Act, even in cases stretching back decades.