Insurer must pay interest on victim’s future earnings, Karnataka HC rules

BENGALURU: The Karnataka High Court has ruled that insurance companies cannot avoid paying interest on amounts awarded under “future prospects– a term defining the probable earnings if the victim had survived – in accident matters.
A division bench of Justices K. Somashekar and Chillakur Sumalatha decided to dismiss the appeal filed by Reliance General Insurance Company.
The case concerned The highestsoftware developer with a specialization in finance, who died in an accident on November 18, 2014, while returning from Sabarimala with friends.
The accident occurred on the National Highway near a hotel on Hosur Road when a truck in front of the car suddenly took a right turn without signaling, causing a collision. Supreeth was seriously injured and died in hospital.
On June 17, 2019 Motor Accident Claims Tribunal In Bengaluru, Rs 51.6 lakh was awarded compensation Supreeth’s family members and the insurer was ordered to pay 95% of the amount.
The insurer argued that the driver of the car had also been negligent and that the owner of the car should be liable for paying part of the compensation. The company also argued that the amount awarded was excessive and the tribunal should not have awarded interest on the amount awarded for loss of prospects.
After reviewing the evidence, the division bench found that the accident was caused solely due to the negligence of the truck driver, as per the police investigation report. The bench noted that Supreeth was a 26-year-old MBA graduate.
The jury emphasized Motor Vehicle Act is a favorable legislation and insurance companies are required to settle claims quickly. “The awarding of compensation is a one-time procedure.
Even if it turns out in the future that the deceased would have earned significantly more, taking into account the increase in his position and opportunities on the international stage, the tribunal will not order any further amount to be paid and insurance companies will not be liable for it.
In view of the above, this court holds that the insurance companies are liable to pay the awarded amount, including the amount awarded in respect of future prospects along with the then prevailing interest rate charged by banks,” the bench explained.
“In no case do claimants receive exactly the amount that the deceased would have earned had he lived. In all cases, the amount that claimants would have received for their maintenance through the deceased would have been many times greater than the amount actually awarded. Insurance companies pay compensation many years after the date of the accident, in clear contravention of section 149 of the Motor Vehicles Act 1988,” the judge said.
The judge ordered the insurer to pay an additional compensation of Rs 40,000 to Supreeth’s family along with interest at 6% on the increased amount.