10. Limitation as to Use

There are certain general exceptions in the Motor Insurance Policy. These are applicable to all sections of the policy. The present one which is being discussed reads as follows:

“The company shall not be liable under this policy in respect of any accidental loss or damage and / or liability caused, sustained or incurred whilst the vehicle insured herein is being used otherwise than in accordance with the’ limitations as to use’.”

‘Limitations as to Use’ is quoted in the inverted commas by the policy. What do we mean by ‘Limitations as to Use’? Does it mean if the vehicle is used otherwise than in accordance with the ‘Limitations as to Use’i.e., if you go beyond those limitationsthen the insurance company is not going to pay?

I searched the entire Motor Policy document whether there is any explanation/definition for the phrase ‘Limitations as to Use’. I did not find. Then I started searching the Policy Schedule. You will find a very brief and very unhelpful definition of the phrase ‘Limitations as to Use’. That definition is as follows:

“The policy covers use of the vehicle for any purpose other than

1. a) Hire or Reward

1. b) Carriage of goods (other than samples of personal luggage)

1. c) Organised racing

1. d) Pace Making

1. e) Reliability trails

1. f) Speed testing

g) any purpose in Connection with Motor Trade.”

That’s why I called this definition very unhelpful.‘Limitations as to Use’ says the policy covers the use of vehicle for purposes other than those stated above. ‘Limitations as to Use’ is so vague, so subjective that insurance company can deny any claim. Consider the following:

1. A saloon car has a seating capacity of five. Generally, in India, five people never sit in a car. Invariably it has to be 8 or 9 people, barely giving space to the driver to drive. With 9 people in a saloon car, if there were to be an accident, will the insurer pay? Obviously, it will not because it is being used beyond ‘Limitations as to Use’.

2. On a motorcycle, generally in India, 3 to 5 people sit and travel. If the vehicle were to meet with an accident resulting in total loss and killing all the 5, will the insurance company pay? Obviously, it will not because it is being used beyond ‘Limitations as to Use’.

3. On a regular Road Transport Corporation (RTC) bus,the people who are unable to find any leg space inside will sit on the roof, on the footboard or any place where they can sit and travel. A bus is typically intended to transport 50 people. If the bus is transporting 100 people and were to have an accident, will the insurance company pay? Obviously, it will not because it is being used beyond ‘Limitations as to Use’. (Usually, the government will step in, announce compensation to the deceased. By doing so don’t you think the government is encouraging people to travel negligently while leaving every safety rule to the wind?)

4. A saloon car in India which actually is intended to transport maximum 5 passengers including driver were to transport goods, will the insurer pay? Obviously, it will not because it is being used beyond ‘Limitations as to Use’.

Therefore, the moral of the story is: the phrase ‘Limitations as to Use’ is dangerous. We need to ensure that everything falls within the ‘Limitations as to Use’. Otherwise, we have a problem. Probably no insurer or the regulator would be in a position to explain the phrase -‘Limitations as to Use’.

Hence, be careful you mindless policyholders!

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