Insurance Coverage for Vehicles with Permits Extends to Foreign Territories Despite Geographical Clause

Case Snapshot

• Case Name: The Oriental Insurance Co. Ltd. v. Durg Roadways Private Limited & Ors.

• Citation: 2026 INSC 722

• Bench: Justice Sanjay Karol and Justice Nongmeikapam Kotiswar Singh

• Date of Judgment: July 20, 2026

• Area of Law: Motor Accident Claims, Insurance Law, Motor Vehicles Act

Judgment in Brief

The Supreme Court dismissed the appeal of the insurer and held that the insurance policy covered an accident that occurred in Nepal, even though the policy specified "Geographical Area: India." The Court ruled that the "Limitation as to Use" clause, which stated that the policy covers use only under a "permit" within the meaning of the Motor Vehicles Act, 1988, overrode the geographical restriction. Since the vehicle had a valid special permit issued under Section 88(8) of the MVA that expressly authorized travel to Nepal, the insurer was liable. The Court further held that Section 147(5) of the MVA, which contains a non-obstante clause, overrides regulations like the India Motor Tariff requiring additional premium for foreign travel. The driver's valid Indian driving license was recognized in Nepal under the Treaty of Peace and Friendship between India and Nepal. The Court also issued suggestions to IRDAI for standardizing cross-border insurance clauses.

Relevant Facts

• The offending bus was registered in India and had a valid special permit issued under Section 88(8) of the Motor Vehicles Act, 1988, authorizing travel from Durg to Nepal and back.

• The vehicle was insured by the appellant-insurer under a policy with "Geographical Area: India" and "Limitation as to Use: The Policy covers use only under a permit within the meaning of the Motor Vehicles Act, 1988."

• The accident occurred in Nepal while the vehicle was on its return journey. Three persons died, including the driver.

• The Motor Accidents Claims Tribunal held the owner liable, not the insurer, because the accident occurred outside India and additional premium for foreign travel was not paid.

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