In Absence Of Fundamental Breach Of Insurance Policy, Up To 75% Expenses Can Be Claimed On Non-Standard Basis: Madhya Pradesh State Commission
The State Consumer Disputes Redressal Commission, Madhya Pradesh bench of Mr A.K. Tiwari (Presiding Member) and Mr Shrikant Pandey (Member) reiterated that when there is no 'fundamental breach' of an insurance policy, the insured can claim up to 75% of the expenses incurred on a non-standard basis from the Insurance Company. The non-standard claims are negotiated claims which cater...
The State Consumer Disputes Redressal Commission, Madhya Pradesh bench of Mr A.K. Tiwari (Presiding Member) and Mr Shrikant Pandey (Member) reiterated that when there is no 'fundamental breach' of an insurance policy, the insured can claim up to 75% of the expenses incurred on a non-standard basis from the Insurance Company. The non-standard claims are negotiated claims which cater to situations where all terms, conditions and warranties of the policy are not fully complied with.
Brief Facts:
The Complainant insured his Swift Desire car with Iffco Tokio General Insurance Company (“Insurance Company”). A premium of Rs. 15,726/- was duly submitted by the Complainant. During the subsistence of the policy, the car got involved in an accident and sustained several damages. It was sent to the servicing centre for repairs, where the Complainant incurred Rs. 3,93,123/- towards repair expenses. Subsequently, he submitted a claim letter with the expense sheet to the Insurance Company for disbursement of the insurance amount. However, the Insurance Company repudiated the claim based on the reason that the car was being used as a 'taxi' at the time of the accident.
Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Chhindwara, Madhya Pradesh (“District Commission”). The District Commission found no deficiency on the part of the Insurance Company and dismissed the complaint. Dissatisfied by the decision, the Complainant filed an appeal before the State Consumer Disputes Redressal Commission, Madhya Pradesh (“State Commission”).
The Complainant contended that the Insurance Company's surveyor also estimated losses of around Rs. 1,11,205/-. Even if it is assumed that the car was being used for a commercial purpose, the Complainant was entitled to receive 75% of the expenses on the non-standard basis from the Insurance Company. This was held in Amalendu Sahoo vs Oriental Insurance Company Ltd. [II (2010) CPJ 9 (SC)].
The Insurance Company contended that in the FIR registered by the Complainant, he admitted that the car was given on a rental basis, which proves that it was being used commercially at the time of the accident. This rendered the insurance policy violated.
Observations of the State Commission:
The State Commission referred to the FIR registered in relation to the car's accident. It was evident that the car was given on a rental basis, which constituted a violation of the policy's terms and conditions. Further, the State Commission noted that in the case of Amalendu Sahoo vs Oriental Insurance Company Ltd. [II (2010) CPJ 9 (SC)], it was held that where there is no fundamental breach of the policy, the insured can claim up to 75% of the expenses incurred.
It was held that the Complainant indeed violated the terms and conditions of the policy, but it was not a 'fundamental breach'. Therefore, the District Commission's order was set aside, and the Insurance Company was directed to pay 60% of Rs. 1,11,205/- (loss assessed by the surveyor) along with 6% simple interest to the Complainant. The parties were directed to bear their own costs.
Case Title: Rajesh Sahu vs Iffco Tokio General Insurance Company and Anr.
Case No.: First Appeal No. 558/2023
Advocate for the Complainant/Appellant: Sunil Nema and Vivek Nema
Advocate for the Respondent: Harpreet Singh Gupta
Date of Pronouncement: 22.07.2024