Chandigarh District Commission Holds HDFC Ergo General Insurance Co. Liable For Wrongful Repudiation Of An Accidental Claim

Brief Facts:

The Complainant purchased an 'Eicher Pro 3015 truck' for livelihood purposes. The truck was acquired from M/s Swami Auto Care Company, with a total cost of ₹ 18,18,000. The Complainant financed ₹ 15,84,000 through HDFC Bank Limited and acquired a Goods Carrying Comprehensive Policy from HDFC Ergo General Insurance Company Limited (“Insurance Company”), insuring the truck for an IDV of ₹ 15.00 lakh. Later, the truck met with an accident in Katya, District Basti, UP, resulting in injuries to the Complainant and the helper, Balbir Singh, who unfortunately succumbed to his injuries later.

Following the accident, the Complainant informed the insurance company, and at its direction, used M/s Santosh Crane Services to tow the damaged truck to the authorized repairer, M/s Swami Auto Care Private Limited. The repairer estimated the cost of ₹ 21,96,591/- for its repair, which surpassed the IDV, leading the insurance company to declare the truck a total loss. Despite repeated requests, the Complainant was not provided with the surveyor's report by the insurance company. The insurance company then repudiated the claim later, citing alleged unrelated damages, misrepresentation, and violation of policy conditions. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-I, U.T. Chandigarh (“District Commission”) and filed a consumer complaint against the insurance company and HDFC Bank.

The insurance company, in its written version, raised preliminary objections regarding maintainability, cause of action, and concealment of facts. While admitting the insurance coverage and validity of the subject policy, it asserted that the claim was repudiated due to the surveyor's findings, indicating a mismatch between the reported cause of loss and the observed damages. It contended that the Complainant's misrepresentation constitutes a fundamental breach of policy terms. HDFC Bank argued that there was no cause of action against it and requested for dismissal of the complaint.

Observations by the District Commission:

The District Commission noted that in the records the Complainant suffered severe injuries in the accident, leading to his hospitalization at Cheema Hospital, Mohali. Due to the circumstances arising from the COVID-19 pandemic, the Complainant was unable to receive treatment in Lucknow, and there was no opportunity for him to lodge an FIR with the police. Similarly, it held that the helper lost his life immediately after the accident, precluding any possibility of filing an FIR.

It held that the presence of the DDR/General Diary, detailing the accident and subsequent police investigation, negated the contention that the absence of an FIR was a basis for dismissing the Complainant's claim. It held that the insurance company, being the insurer, bears the onus to provide evidence of the truck's involvement in the collision. It held that it would be unsafe to hold that the damage did not align with the reported cause of the loss or that the Complainant misrepresented facts, especially given the admitted damage to the truck in the accident. Therefore, it held the insurance company liable for deficiency in services as the insurance company's repudiation of the claim was unjustified.

Consequently, the District Commission directed the insurance company to pay the Complainant ₹ 14,99,000/-, representing the IDV amount of the truck, less the compulsory deductible/excess clause of ₹ 1,000/-, along with interest at the rate of 9% per annum from the date of repudiation (29.12.2020). Additionally, the insurance company was ordered to pay ₹ 40,000/- as compensation for the mental agony and harassment endured by the Complainant, along with ₹ 10,000 as litigation costs.