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Posted at: Jan 14, 2018, 1:43 AM; last updated: Jan 14, 2018, 1:43 AM (IST)CONSUMERS BEWARE!

Insurance cos can’t hold you to ransom

Insurance cos can’t hold you to ransom

Pushpa Girimaji

Some months ago, my tractor got stolen while it was parked outside our house. Even though investigation by the police has proved that it has been stolen, the insurance company is refusing to indemnify my loss on the ground that I reported the theft five days after the incident took place. The delay was on account of the fact that I was quite hopeful that the police would recover the vehicle. When they failed to do so even after four days, we informed the insurance company and gave it a copy of the FIR. The insurance company says we have violated the policy condition that required us to report the theft immediately. Is there any hope of getting the insurance company to pay?

It is extremely important for a policy holder, whatever the nature of the insurance policy, to read and understand the policy conditions and follow them scrupulously so that the insurer does not get an excuse to repudiate the claim. And in case of theft of a vehicle, you are expected to immediately lodge a police complaint and inform the insurer in writing.

However, do not lose heart. Your failure to report was borne out of your conviction that you will get back your vehicle and the delay was not on account of any ulterior motive. Fortunately for you, the apex consumer court has only recently come to the help of an insured in a somewhat similar case and asked the insurance company to pay. So write to the insurance company again and ask them to pay. If they fail to do so, you can lodge a complaint with the Insurance Ombudsman or the consumer court. Just make sure that you have all the relevant papers.


Can you tell me about the judgment of the apex consumer court that you have referred to?

Certainly. This case has its origin in the theft of an insured dumper on July 16, 2012. This dumper was parked on the roadside and the complainant immediately lodged a police complaint and informed the insurance company on phone and generated a complaint number 102526 the very next day. Subsequently, she sent a written intimation on July 21 and lodged a claim with the insurance company after the police issued a closure report on July 27. The latter, however, rejected it on August 1, saying that there was a delay of six days in intimating the insurer in writing about the theft and, as this was a breach of the policy condition, she was not entitled to any insured amount. Following the rejection, the bank, which had given a loan for the purchase of the dumper, auctioned the complainant’s house and recovered its money.

 The Maharashtra State Consumer Disputes Redressal Commission, before which she filed a complaint, asked the insurer to pay the assured amount of Rs 22,76,000 along with 9 per cent interest, besides Rs 50,000 as compensation for the mental agony and Rs 25,000 towards costs. 

While upholding the verdict of the lower consumer court, the National Consumer Disputes Redressal Commission quoted the Supreme Court in Om Prakash Vs Reliance General Insurance and Another (2017)9SCC 724 , wherein the Supreme Court had observed that : “It is common knowledge that a person who lost his vehicle may not straightaway go to the Insurance Company to claim compensation. At first, he will make efforts to trace the vehicle. It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, this condition should not bar settlement of genuine claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.”

The Supreme Court also observed: “The decision of the insurer to reject the claim has to be based on valid grounds. Rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy holders in the insurance industry. If the reason for delay in making a claim is satisfactory explained, such a claim cannot be rejected on the ground of delay.” “It is also necessary to state that it would not be fair and reasonable to reject genuine claims which have already been verified and found to be correct by the Investigator. The condition regarding the delay shall not be a shelter to repudiate the insurance claims which have been otherwise proved to be genuine.”

The Commission pointed out that as per the law laid down by the apex court, the insurer cannot reject the claim merely on this technical ground (Shriram General Insurance Company Vs Malan Nivruuti Kamble, FA No 409 of 2015, order dated December 1, 2017).


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