Supreme Court Rules Mediclaim Amount from Motor Vehicle Accidents Non-Deductible from Compensation Awards

Supreme Court Ruling: Mediclaim and Motor Accidents Claims Tribunal Compensation

In a significant decision, the Supreme Court has ruled that compensation receivable under mediclaim or medical insurance cannot be deducted from the amount awarded by the Motor Accidents Claims Tribunal. The bench of Justice Sanjay Karol and Justice Vipul M. Pancholi observed that the tribunal-awarded compensation is statutory, while mediclaim is contractual, with premiums having been paid in the past.

The central legal issue before the court was whether the insurance company could deduct the amount received under a mediclaim policy from the compensation awarded by the claims tribunal. The court rejected this argument, stating that the two entitlements operate in separate domains and that the statutory right to compensation cannot be diminished by importing considerations arising from a contractual benefit.

The case involved an insured individual who was involved in a motor vehicle accident and was awarded compensation by the Motor Accidents Claims Tribunal. The insured later sought compensation from the insurance company under the mediclaim policy for the same expenses, but the insurance company denied the claim, citing that the claimant had already been reimbursed for medical expenses.

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Case Comparison

The court noted that the provisions of the Motor Vehicles Act are triggered in the event of a motor vehicle accident, and that the contractual benefit of mediclaim cannot be diminished by the statutory right to compensation. The court also ruled that terming the two amounts as "double benefit" would be inappropriate, as one situation is only the fruit of amounts already paid in the past.

The Motor Accident Claims Tribunal awards monetary relief to victims or the families of road accident victims to cover injuries, disability, death, medical expenses, loss of income, and other damages, as per the provisions of the Motor Vehicles Act. Personal accident cover, on the other hand, is often purchased separately by the car owner as an add-on, with premiums typically ranging from Rs 350-500 extra per month, while some insurers provide it as part of the car insurance policy.

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The court also noted that there were previously contradictory rulings by benches of the same High Courts on similar questions pertaining to motor vehicle accident insurance claims, and cited the situation as "unsettling".