Supreme Court Rules Insurance Companies Must Prove Negligence in Driver Licence Verification, Calls Out Unwarranted Legal Battles

Last Updated on October 31, 2023 by News Desk

A decision by the Supreme Court states that an insurance company cannot claim it is free from responsibility in the case of a car accident just because the car’s owner neglected to verify the identity of the hired driver. It is the insurance company’s responsibility to prove that the owner of the vehicle did not take reasonable steps to verify the driver’s licence.

According to the court, it would be impractical for every individual hiring a driver to ascertain whether the driver’s licence is legitimate and valid. When an employee shows up to work with a seemingly valid driver’s license, unless the licence is clearly phoney and would lead a reasonable employer to question its authenticity, or if the licence has already expired or there are other reasons to seriously doubt its validity, the onus of proof shifts to the insurance company to show that the owner of the vehicle failed to conduct due diligence on the licence prior to hiring the driver.

The Supreme Court expressed shock at insurance companies’ decision to press these cases all the way to the Supreme Court, given that the legal issue has been settled. It was shocking that insurance companies felt it was appropriate to make these arguments frequently, ignoring the facts of the case and the body of evidence at hand, and that these cases had to be pursued all the way to the final forum for appeal, even though doing so would have required wasting time and resources during the trial.

In the case at hand, the Appellant Insurance Company approached the Apex Court challenging the order of the Delhi High Court that reversed the award passed by the Motor Accident Claims Tribunal granting the right of recovery to the Insurance Company.

The Motor Vehicle Act of 1988’s Section 149(2)(a)(ii) and the relevant insurance policy’s “Driver Clause” do not require the owner of an insured vehicle to typically obtain the driver’s licence from the relevant transport authorities and have it verified, as noted by the Court.

Written by: Srijan Raj @raaj_srijan