Delhi State Commission Holds Bajaj Alliance General Insurance Liable For Deficiency In Service Due To Denial Of Insurance Claim Over Policy Violation

Brief Facts of the Case

The The complainant's father purchased a Santro car to gift to her upon her marriage. The car was bought from Malwa Auto Sales/dealer, who issued a temporary registration number. Bajaj Alliance Insurance Company insured the vehicle with a cover note that was effective for a year. The complainant paid Rs. 11,000 to the dealer for permanent registration, but despite repeated attempts and visits, the necessary documents, including the RC, were not provided. Subsequently, the car was stolen, and a police report was filed. The complainant informed the insurer about the theft but received letters alleging violations of Motor Vehicle Act Section 39 and failure to report the incident promptly. The insurance claim was subsequently denied, citing failure to register the vehicle and other alleged breaches. The complainant argues that she fulfilled her obligations, and the repudiation of her claim was unjust. The complainant approached the district commission and allowed the complaint. The district commission ordered that the insurer settle the claim on a nonstandard basis, paying 75% of the -DV of the vehicle along with interest @6%P.A. from the date of filing of the complaint till realization. The commission ordered the dealer to refund the registration fee of Rs. 11,000 charged from the complainant and further pay compensation of Rs.20,000 to the complainant. The complaint filed is a first appeal by the insurer before the State Commission of Delhi against the District Commission's order.

Contentions of the Opposite Party

The insurer repudiated the claims of the claimant on account of violation of the terms and conditions of the policy. The insurer objected, stating that they were not informed of the theft for 26 days, depriving them of the opportunity to investigate and locate the vehicle. They argued that this constituted a violation of Condition No. 1 of the policy.

Observations by the Commission

The commission referred to the ruling in the case Gurshinder Singh vs. Shriram General Insurance Co. Ltd., where the Supreme Court ruled that delayed intimation to the insurance company wouldn't forfeit the total insurance claim if an FIR had been lodged immediately within a reasonable time and all other conditions were met. However, in the present case, the FIR was lodged after a delay of 12 days, and there was also a delay in giving intimation to the police. Since no evidence was provided to support the claim that information was given to the police on the same day, the commission found that an important condition of the policy had been violated. Referring to a previous Supreme Court ruling, Amalendu Sahoo Vs. Oriental Insurance Company Limited, the commission determined that if any condition of the policy had been violated, the claim might be settled on a non-standard basis up to 75% of the otherwise admissible claim. Therefore, in this case, the district commission allowed the insurance claim to be 70% of the Insured Declared Value (IDV) of the vehicle due to the violations of policy conditions.

The commission ruled that even if an insured breaches their insurance policy conditions, the claim may still be settled, albeit under non-standard terms. In this instance, although the FIR was filed later, the delay in informing the insurance company does not justify denying the claim, given the timely report to the police. Moreover, the police issued an untraced report for the vehicle. Hence, the insurance company, as the appellant, cannot evade its obligation to settle the claim as instructed by the District Commission.

The commission did not find any merits in the appeal and upheld the order by the district commission.

Case Title: Bajaj Alliance General Insurance Co. Ltd.Vs. Ms. Suman Rana & Anr.

Case Number: F.A. No. 373/2014