Representative image.
| Photo Credit: Getty Images/iStockphoto
Parents are invaluable, but insurance needs a rupee value basis for compensating financial loss. Thus long, a woman with no independent earnings and essentially a housewife, did not warrant a compensation in motor accident third-party liability cases. Now a value has been fixed for her life, enabling compensation. The Supreme Court fixed ₹30,000 a month as the minimum economic value of her contribution in terms of unpaid domestic work and caregiving, to serve as the basis for compensation.
This ruling was part of a landmark judgment delivered on June 11, 2026 in an appeal in a motor accident claim for a 2001 accident in Punjab in which a housewife died. It highlighted that unpaid domestic and caregiving work, mostly the lot of women, forms about 15% of the country’s Gross Domestic Product (GDP) but has never been quantified or formalised as a metric. The fact is that a homemaker’s work, though unpaid, carries enormous financial and societal value.
As a result of this ruling, a new legal category called “Loss of Domestic Care” has been created in the compensation table in the Motor Vehicles Act (MVA), 1988 and under this, the insurance company cannot follow the earlier method of ascribing a nil value for compensation as in the case of unskilled labourers.
Some background
Motor Third-Party Liability (TP) insurance compensates the insured for any legal liability to a third party created by his vehicle in an accident, including death.
MVA 1988 introduced a mathematical formula and a matrix for automatically calculating compensation amounts for death which could be awarded by courts where the income of the deceased was ₹40,000 a month or less.
Called structured compensation, it took into account the deceased’s earnings, earnings potential in the future, his or her age and adjusted it for personal expenses.
By this it provided a solution that all the parties, the courts, the insurance companies and the victims’ families could make peace with and not litigate endlessly in hopes of unknown high compensations. The matrix did not have a category relating to homemakers and so their life value was taken as nil, as in the case of unskilled labourers, while deciding compensation in cases.
Clearly, the multiple roles a wife or mother plays to keep the home running and the family cared for has a much higher market price than zero, should they be outsourced to professionals.
Impact on insurance and claims
In the case on which the Supreme Court Bench was ruling, the compensation earlier fixed at ₹8.43 lakh by the High Court was raised to ₹62.78 lakh.
The Supreme Court clarified that this ruling does not legally enforce a monthly salary to be paid to housewives by their husbands. Though one wishes!
Also of significance is that the ₹30,000 per month is a minimum and Motor Accident Claims Tribunals (MACT), special courts for Motor TP accident claims, can use this as a starting point for fixing compensation and individual cases can be built for higher compensations.
There is also a built in 10% increase on this baseline amount every three years for inflation.
The impact on various types of claims/cases will unfold as time goes on. On the underwriting front, homemakers could not get life insurance till now as they had no formal income and this would change enabling policies to be taken on their lives. One is sure new policies are being designed for the whole new segment that has been opened up.
One is even more sure that the premium rates for motor TP policies will go up to take care of additional claims they have to pay out under this category!
(The writer is a business journalist specialising in insurance & corporate history)
Published – July 13, 2026 06:50 am IST
