SC – Insurance Contract is Personal – No Claim by Hire Purchaser Financer

Insurance Claim of Hire Purchase Financer & Privity of Contract

Respondent No.2 had taken the finance of the appellant for purchase of the vehicle insured with the respondent no.1.

There was endorsement of hire purchase agreement on the insurance policy.

On 13.12.2003, the appellant surrendered the vehicle to the appellant.

The said vehicle, while in custody of the appellant, was stolen.

The appellant filed insurance claim with the undertaking to execute the letter of subrogation for any future claim from insured person.

The Insurer repudiated the claim.

In the present case, the nature of the agreement/endorsement as entered in between the Appellant and the Insured Person was not clearly specified whether it was a “Hire-purchase”, “Hypothecation” or a “lease” agreement.

It is a settled position of law that a contract of insurance is a personal contract only between the insured and the insurance company and no third party can raise any claims pursuant to the said contract. In the present case also, even if we assume that the Insured Person had surrendered the vehicle to the Appellant, then also the fact remains that the Appellant cannot be considered as the owner of the vehicle and hence, the Insurance Company could not be forced to 7 indemnify the Appellant herein.

Order dated 18.6.2026 of the Supreme Court in Civil Appeal No.20846 of 2017 of K. Prakashchand   Vs.   Oriental Insurance Co. Ltd