Amount paid by insurance company under Mediclaim policy deductible from road accident compensation: Madras Supreme Court

The Madras High Court ruled that compensation for medical expenses is a matter of reimbursement and therefore once the insurance company chooses to compensate the victim of a road accident for the expenses medical conditions, it can no longer be claimed under the Motor Vehicle Act.

The bench of Judge Teeka Raman thus ruled that the amount paid to the hospital directly by the insurance company under medical coverage should be deducted by the Motor Vehicle Accident Tribunal when calculating compensation for the injured.

The order was made in an appeal by the insurance company, TATA AIG General Insurance Co Ltd, against an order issued by the Motor Accident Claims Tribunal, Karur awarding Rs. 9,08,954 as medical expenses.

The appellant argued that the court erred as it failed to take into consideration the sum of Rs.4,00,000/- reinvested by the insurance company under the medi-claim policy to the injured . Thus, the petitioner argued that the amount had already been paid to the hospital and that it could not be awarded as it would amount to double compensation.

The appellant relied on the decision of the Madras High Court in Cholamandalam MS General Insurance Co. Ltd v A Saravanan 2012 (1) TNMAC 606 where the court observed the following:

“…With respect to the LIC policy, the policyholder is entitled to payment of the full premium on maturity or the heirs are entitled to payment in the event of death. life insurance does not depend on the injury on the other hand, as far as the medi-claim policy is concerned, the amount is due to the claimant when he suffers injuries in an accident head “medical treatment” cannot be granted.”

On the contrary, the respondents relied on the court’s decision in National Insurance Co. Ltd v C Ramesh Babu [2013 (2) TNMAC 636] and argued that the medi-claim policy is not deductible and not recoverable in a claim under the Motor Vehicle Act.

The court accepted the appellants’ arguments. The court also took note of the judgment of Apex Court in United India Insurance Co. Ltd v. Mrs. Patricia Jean Mahajan where it went like this:

“24….it is clear that deductions are allowable from the amount of compensation in the event that the plaintiff receives the compensation as a result of injuries suffered, to which he would not otherwise have been entitled. It does not does not cover cases where the payment received is not dependent on an injury sustained in an accident.”

The court observed that what was not paid by the original claimant to the hospital cannot be awarded as compensation in a claim under the Motor Vehicle Act. Thus, the court deducted the amount already paid by the insurance company and ordered the appellant company to pay the remainder as well as compensation for disability, pain and suffering, permanent disability, loss of income, etc., as well as interest of 7.5% per annum and to deposit the same within eight weeks. In case the full amount has already been deposited by the company, the court ordered the court to refund the excess amount to the company with proportional interest.

Case title: The Director, TATA AIG General Insurance Co Ltd v. Kathamuthu and another

Case no: 2017 AMC (MD) No. 729

Quote: 2022 LiveLaw (Mad) 223

Counsel for the Appellant: Mr.JSMuraliThe amount paid by the insurance company under Medi’s claim policy should be deducted when calculating compensation: Madras HC

Counsel for the Respondent: Mr. R. Suresh Kumar (R1)

Click here to read/download the judgment


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Justin D. O'Neill