Insurance firm cannot deny claim over route permit: Chandigarh panel

The District Consumer Disputes Redressal Commission-II, Chandigarh, has held that an insurance company cannot reject a motor insurance claim merely on the ground that the vehicle allegedly did not possess a route permit for a particular territory.

The commission has directed the company to reimburse Rs 3,07,790 along with interest at the rate 9% per annum from July 01, 2020, till realisation, and pay Rs 25,000 towards compensation and litigation expenses.

The commission passed the order on a complaint filed by Sukhvir Singh through counsel Raman Sihag. He said his truck, insured with United India Insurance Company Limited, met with an accident on at Sector 25/38 (West), Chandigarh, on July 9, 2019. Its repairs at a workshop cost Rs 3,07,790.

However, despite appointment of a surveyor and assessment of loss, the insurance company repudiated the claim on the ground that the vehicle did not have a valid route permit for plying in Chandigarh, though it had a valid permit for Punjab.

Sihag argued that that the insurance company had wrongly and arbitrarily rejected the claim on a hyper-technical ground, despite the fact that the alleged permit issue had no connection with the accident.

After hearing the parties and examining the record, the commission observed that there was a clear distinction between absence of a route permit altogether and an alleged territorial irregularity when the vehicle otherwise held a valid permit. It held that the alleged absence of a Chandigarh permit had no connection with the occurrence of the accident or the damage caused to the vehicle.

The commission relied upon precedents set by the Punjab and Haryana High Court, the National Consumer Disputes Redressal Commission and the Supreme Court, holding that technical or minor irregularities, which do not contribute to the cause of loss, cannot be treated as fundamental breaches justifying repudiation of insurance claims.

The commission said needless to mention here that the purpose of obtaining an insurance policy is not for any luxury but to cover up for some unforeseen eventuality. However, it is usual with the insurance companies to show all

types of green pastures to customers at the time of selling insurance

policies, and when it comes to payment of the insurance claim, they invent all sorts of excuses to deny the claim.

Holding the repudiation to be unjustified and arbitrary, the commission found the insurer guilty of deficiency in service and directed it to reimburse Rs 3,07,790 along with interest at the rate of 9% per annum from July 01, 2020 till realisation.