In India, overcrowded means of transport are the norm. You look at buses / trucks / jeeps / taxis, all of them seem to be over-crowded and full of passengers. In the case of an accident, the insurance company is inundated with cases filed by the passengers. So now there is a clarification about the limits to how much the insurance claims can be filed:

Insurance companies cannot be compelled to pay compensation to all passengers in road accidents involving overloaded vehicles of public transport as the liability is restricted only to authorised number of passengers, the Supreme Court has ruled. In other words, if a 42-seater bus overloaded with 90 passengers meets with an accident, the insurance company is liable to pay compensation only to the extent of the authorised 42 passengers.
The apex court passed the ruling while setting aside the orders passed by the Himachal Pradesh High Court and the Motor Vehicle Accidents Tribunal which had directed the National Insurance Company to compensate all the 90 passengers of a 42-seater bus involved in an accident.

This is an interesting judgment, and could affect people who get impacted by accidents. Typically, in most urban and rural areas, public transport is over-loaded. In the case of accidents, people would no longer have the safety of at least having insurance. However, this is correct from the perspective of an insurance company since the insurance on the vehicle and costing is as per the carrying capacity of the vehicle.