Rain plays havoc, insurance co games

Pushpa Girimaji

It was raining heavily and the roads were flooded while I was returning from work. At one point, while manoeuvring a roundabout inundated with water, my vehicle stalled and would not start again. I had to get my car towed to the service station and was told that the engine had been damaged as water had entered it. As the cost of repair was very high, I immediately informed the insurance company about the damage. They have, however, refused to pay for the repairs saying that the insurance does not cover it. Is there any way I can get them to pay?

If the mechanic/service centre has certified that the engine was damaged on account of flooding of the rainwater and you have informed the insurance company about the damage immediately, I do not see any reason for repudiation of your claim. However, as the insurance company is refusing to indemnify your loss, I would suggest that you lodge a complaint before the Insurance Ombudsman. Go to the website, policyholder.com, run by the Insurance Regulatory and Development Authority (IRDA) for the benefit of policy holders. You will see on the website, an icon saying ‘Ombudsman’. That would give you contact details of the Ombudsmen in the country. You can send your complaint to the appropriate address.

Do you know of any case similar to mine decided by the Ombudsman?

Let me quote two awards of the Insurance Ombudsman in similar cases. In Lt-Col AK Nag Vs Bharti Axa General Insurance Company Limited, the complaint was that the vehicle suffered engine damage on account of extreme unforeseen weather conditions — intense heavy rains — on the morning of July 20, 2017 in Noida. Here too, the car stalled while being driven in the rain. When an attempt was made to restart the engine, the complainant noticed white smoke coming out of the exhaust pipe. The service centre to which the vehicle was taken said that the engine had been damaged on account of the heavy rain and needed repair. The complainant informed the insurer about it and a surveyor was sent in response. However, the insurer rejected the claim saying that it was not damaged due to water but due to mechanical breakdown and since the policy did not include ‘engine protection cover’, the insurer cannot pay for repair of the engine. 

Keeping in view the conflicting technical arguments, the Ombudsman sought the opinion of an independent IRDA-approved surveyor. His view was that due to sudden waterlogging caused by heavy rain, the engine had been damaged. So the Ombudsman held that the main cause of loss was flood or rainwater (natural calamity) peril, which is not excluded in the comprehensive motor vehicle policy. So the complainant should be indemnified for affected parts. The insurer was, therefore, directed to pay Rs 1,52,900 to the insured. (Date of award: December 22, 2017)

In a similar case (Jitendra Kumar Vs Iffco Tokio General Insurance Company Ltd) emanating from engine damage caused on June 21, 2017, the insurer rejected the claim saying that the damage to the engine had occurred due to mishandling and using the vehicle after engine damage due to rainwater. So this was a consequential loss that was not covered under the policy. As the insured had not taken an additional cover for engine and gear box protection, the claim was liable to be rejected. The insurer also pointed out in this case that the intimation of loss was given after a delay of 24 days. This was a clear violation of the policy condition which stipulates that immediate intimation of accidental loss should be given to the insurer.

In this case too, the Ombudsman sought the technical advice of an independent IRDA-approved surveyor, who held that engine damage cannot be considered as consequential damage as rainwater had entered the engine box and damaged the engine parts. On the basis of this, in this case too, the Ombudsman held that the repudiation of the claim was unfair and unjustified. The damage caused on account of rainwater falls under the category of ‘flood and inundation’, a peril covered under the policy, the Ombudsman pointed out.

However, the Ombudsman agreed with the insurer that there was an inordinate delay on the part of the insured in intimating the insurer about the vehicle damage. So keeping this mind, the insurance company was directed to settle admissible loss on ‘substandard basis’ to the insured. (Date of award: December 21, 2017).