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MVA 1988 (Amended 2019)ORIGINALChapter VII

Section 148-150

Validity of Policies; Liability of Insurer; Rights of Third Parties Against Insurers

Insurance of Motor Vehicles Against Third-Party Risks
Fine: N/ACompoundable: N/AEndorsement: No
BARE ACT PROVISION

Legal Text

Section 148: A policy of insurance issued in any State shall be valid in all other States. Section 149: If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall pay to the person entitled to the benefit of the decree any sum not exceeding the sum insured under the policy in respect of the liability. Section 150: If any person against whom a claim is made in respect of any liability referred to in clause (b) of sub-section (1) of section 147 is insolvent or cannot be found, the insurer who would have been liable under the policy shall be directly liable to indemnify the claimant.

Simplified Explanation

Sections 148–150 establish three critical protections for accident victims within the insurance framework. Section 148 creates national validity of insurance policies — a policy issued in Tamil Nadu covers the vehicle when it's involved in an accident in Punjab. This mirrors the national validity of driving licences (Section 13) and RC (Section 47). Section 149 is one of the most practically important provisions in accident law: even where the insurer has grounds to avoid or cancel the policy (technical breaches, non-disclosure, policy conditions violated), the insurer must still pay the third-party victim who has obtained a court/MACT judgment. The insurer cannot use policy defences to escape liability to innocent third parties — it pays the victim and then recovers from the insured owner. Section 150 creates a direct liability on the insurer where the vehicle owner cannot be found or is insolvent — preventing the common tactic of judgment debtors becoming untraceable to escape MACT awards.

Historical Context

The protections in Sections 148–150 address the fundamental asymmetry in accident cases: the victim (often a pedestrian or cyclist) has no contractual relationship with the insurer, yet the entire insurance framework is meant to benefit them. These sections pierce through the technical insurance contract to protect innocent third parties.

Critical Changes

Section 149's 'pay and recover' principle firmly established by Supreme Court.

Insurer cannot escape third-party liability by pointing to policy exclusions or breaches.

Practical Scenarios

"An accident caused by a drunk driver — insurer pays the victim and then recovers from the owner who entrusted the car to a drunk driver."
"A hit-and-run where the vehicle is eventually traced but the owner has fled — insurer directly liable under Section 150."

Common Queries

Not to the third-party victim. Under Section 149, the insurer must pay the victim even if the driver was drunk, unlicensed, or in violation of policy conditions. The insurer can later recover this amount from the vehicle owner who breached the policy.
Under Section 150, the insurer is directly liable to the accident victim even where the vehicle owner cannot be found or is insolvent. The victim can claim directly from the insurer.