Stay updated with the latest - Click here to follow us on Instagram
Journalism of Courage
Premium
This is an archive article published on November 1, 2017
Motor accident insurance claims: Supreme Court lays down norms to calculate compensation
The order marks a radical break from the practice, in which future prospects were considered only for those having a permanent job with scope for increase in salary.
The court also standardised the mode of computation of compensation claims in fatal accident cases.
“Future prospects” will be considered while deciding the amount of compensation in fatal motor accident claims for self-employed and fixed-income victims, a five-judge Constitution bench of the Supreme Court said on Tuesday. Future prospects refer to what the claimants would have earned in the form of future increase in income if they were alive.
The order marks a radical break from the practice, in which future prospects were considered only for those having a permanent job with scope for increase in salary. The court also standardised the mode of computation of compensation claims in fatal accident cases.
“The practice till 2008 was to award 50 per cent of the last drawn salary as compensation in case of fatal accident claims. In 2008, a two-judge bench of the SC in the Sarla Kumari case said future prospects should be taken into account while tabulating compensation to be awarded to those with permanent jobs. Accordingly, a specific percentage of the last drawn salary, over and above the last pay, was laid down for different age groups,” said S Giridharan, a former regional manager with Oriental Insurance.
Subsequently, other SC benches ruled that it should also be extended to the self-employed, following which the matter was referred to the Constitution bench for greater clarity, he added.
Tuesday’s judgment also extended the benefits of future prospects to the 50-60 age group for both permanent and self-employed/fixed income victims. As per current law, future prospects are not taken into account for tabulating compensation for victims above 50 years.
The bench, comprising CJI Dipak Misra and Justices A K Sikri, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan, rejected the argument that in the case of those with permanent jobs, there was a certainty about what their future prospects would be, unlike the self-employed or those with fixed salaries for whom future prospects would be uncertain. “To have the perception that he (self-employed person) is likely to remain static and his income to remain stagnant is contrary to the fundamental concept of human attitude which always intends to live with dynamism and move and change with the time,” the court said.
“Taking into consideration the cumulative… an addition of 40% of the established income of the deceased towards future prospects and where the deceased was below 40 years an addition of 25% where the deceased was between the age of 40 to 50 years would be reasonable (for self employed/fixed income people),” it added.
Story continues below this ad
For those in the 50-60 age group in this category, the addition will be 10 per cent.
Advertisement
Loading Recommendations...
Live Blog