No insurance claim for reckless driving, says SC: Read fine print carefully
New Delhi, Jul 4, 2025
'Insurance is a protective tool, not a safety net for irresponsible behaviour,' says expert, as SC ruling limits payouts in accidents caused by the policyholder
The Supreme Court has ruled that insurance companies are not obliged to pay compensation to the families of policyholders who die as a result of their own rash or negligent driving.
The judgment, delivered on July 3, underscores a critical gap in motor insurance coverage that many vehicle owners and their families may not be fully aware of.
A bench of Justices PS Narasimha and R Mahadevan upheld the Karnataka High Court’s order rejecting an ~80,00,000 compensation claim made by the deceased’s legal heirs. The court observed that the accident, which occurred in June 2014, was caused by the deceased’s negligent driving.
“We are not inclined to interfere with the impugned judgment passed by the high court. Hence, the Special Leave Petition is dismissed,” the bench said in its order.
The verdict has sparked fresh debate about what insurance policies really cover and more importantly, what they don’t.
‘Insurance is not a safety net for irresponsible driving’
“This landmark ruling reiterates a fundamental truth: insurance is a protective tool, not a safety net for irresponsible behaviour,” said Saurabh Vijayvergia, founder and chief executive officer of CoverSure.
He pointed out that beyond rash or negligent driving, insurers routinely exclude claims arising from violations such as driving without a valid license, intoxicated driving, expired policies, unauthorised vehicle modifications, and delayed incident reporting.
“Drivers must act responsibly, comply with traffic laws, maintain valid documentation, and promptly report any incidents that occur. Only with shared accountability can we preserve the integrity of the insurance ecosystem and ensure fair, predictable outcomes for all stakeholders,” Vijayvergia added.
A shift toward fault-based claims evaluation
The verdict will likely lead to tighter scrutiny of fatal accident claims, Vaibhav Kathju, founder and chief executive officer of Inka Insurance, said.
“Traditionally, insurance companies offered compensation in most fatal accidents, often without delving deep into fault attribution. But this ruling clarifies that when the deceased is proven to be a ‘tort-feasor’ essentially, the one at fault the insurer is under no obligation to pay. Expect more evidence-based evaluations of accident claims going forward,” he noted.
Kathju cautioned that policyholders and their families should brace for stricter documentation requirements and more disputes around liability in the future.
What Families Must Watch Out For
Both experts stressed the importance of understanding common exclusions in motor insurance. These include:
Driving under the influence of alcohol or drugs.
No valid driving license at the time of the accident.
Using the vehicle for unauthorised commercial purposes.
Mechanical or electrical breakdowns not caused by accidents.
“To avoid disputes, families should read the fine print and clarify coverage terms with their insurers. In cases involving fatalities, a clear police FIR, proof of driving credentials, and evidence of compliant vehicle usage become essential for claim settlement,” Kathju said.
As motor insurance moves toward stricter compliance, being proactive about policy awareness and documentation is no longer optional.
[The Business Standard]
