Is a pillion rider a third-party?
When you insure a vehicle (specifically a two-wheeler) in India, you are typically choosing between one of two types of cover;
A Comprehensive Policy is the broadest form of cover. It has two parts: Own Damage (OD), which covers damage to your own vehicle from accidents, fire, theft, or natural calamities; and Third Party (TP) liability, which covers your legal responsibility to others who are injured or whose property is damaged because of your vehicle.
A Third Party Only policy, on the other hand, covers only your liability to other people. It does not cover damage to your own vehicle. Under the Motor Vehicles Act, 1988, this is the minimum cover legally required before any vehicle can be driven on a public road.
But prior to 2018, there existed the Act Only Policy, an older name for this minimum mandatory cover, which covered just the statutory third party liability required by law.
Then came the Bundled Policy, introduced by insurance companies from 2018 onwards. This was a direct response to a problem that two-wheeler policies were frequently lapsing, leaving accident victims without compensation because insurers could use the gap as a technical escape route.
The Bundled Policy addressed this by combining a long-term third party cover (typically five years) with a shorter own damage cover, ensuring continuous protection. Crucially, the Bundled Policy explicitly extended its third party liability section to cover occupants of the insured vehicle, including pillion riders and not just strangers on the road.
The Case
On 11 November 2020, on the Madurai-Ramanathapuram Highway, Rahamathulla was riding pillion on a two-wheeler driven by his friend Ramprasath. Ramprasath drove carelessly, struck a reflector board placed on the road, and both fell. Rahamathulla sustained fatal injuries and died.
His family approached the Motor Accident Claims Tribunal in Coimbatore, seeking ₹30 lakh in compensation. The vehicle was insured with ICICI Lombard under a Bundled Two-Wheeler Policy, with third party liability cover in force for five years, within which the accident fell.
The insurance company contested the claim, arguing that despite the policy being called a Bundled Policy, it was in substance only an Act Only Policy, and that under an Act Only Policy, a pillion rider does not qualify as a “third party” and therefore cannot claim compensation from the insurer. In their view, the entire liability rested with the vehicle owner.
The MACT disagreed and directed ICICI Lombard to pay the compensation, but added a “pay and recover” direction, meaning the insurer could pay the family and then recover the amount from the vehicle’s owner. Unhappy with being held liable at all, ICICI Lombard appealed to the Madras High Court.
The Insurer’s own argument turned against it
In court, ICICI Lombard relied on a Supreme Court precedent: National Insurance Company Ltd. vs. Balakrishnan and Another [Civil Appeal No.8163 of 2012, dated 20.11.2012]. This Supreme Court case had examined both Act Only Policies and Comprehensive/Package Policies in detail, and had clearly distinguished between the two. The Supreme Court in Balakrishnan had held, based on IRDA circulars, that a Comprehensive or Package Policy covers pillion riders and vehicle occupants as a matter of settled law.
The Madras High Court pointed out that the Balakrishnan judgment, far from helping the insurer, actually confirmed the opposite of what it was arguing. The Supreme Court in that case had held that a comprehensive or package policy covers a pillion rider, and that raising a contrary argument was not even permissible given IRDA’s own circulars on the matter.
More importantly, the court applied its own earlier ruling in C.M.A.No.3882 of 2026 (dated 25.03.2026), where it had already examined the Bundled Two-Wheeler Policy in detail. That judgment had concluded that the Bundled Policy’s “Section II – Liability to Third Parties” explicitly covers “occupants carried in the insured vehicle,” which includes the pillion rider. The Two-Wheeler Bundled Policy introduced in 2018 was therefore structurally different from the old Act Only Policy, and the insurer could not treat it as one simply because it found it convenient to do so.
The court held that an insurer cannot call a policy a Bundled Policy when it sells it, collect the premium for comprehensive bundled coverage, and then claim it is only an Act Only Policy when a claim arises.
The Verdict
The Madras High Court Justices C.V. Karthikeyan and K. Rajasekar dismissed ICICI Lombard’s appeal on decided on 23 June 2026.
The insurer was directed to deposit the full compensation awarded by the Tribunal, along with interest and costs, within six weeks. The amount is to be credited directly to the bank accounts of the claimants (Rahamathulla’s father, wife, and daughter.)
There is one additional and meaningful point in the ruling. The original Tribunal had directed ICICI Lombard to pay the compensation and then recover it from the vehicle owner, a “pay and recover” arrangement typically used when there has been a genuine policy violation.
The High Court set aside this recovery direction entirely. Since the Bundled Policy legitimately covers pillion riders, there was no violation to speak of. The insurer simply has to pay and it cannot chase the vehicle owner for the money.
You can read the full court order here.
If you own a two-wheeler and have a Bundled Policy, this ruling confirms what your policy document actually says: your pillion rider is covered under the third-party liability section. An insurer cannot strip that protection away.
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