Refusal Of An Insurance Claim Solely Based On The Late Intimation Of The Complaint Is Not Justified: NCDRC

Contentions of the Complainant

The complainant insured his vehicle through an agent of Oriental Insurance Company located within the vehicle dealer showroom. When the vehicle was stolen, the complainant reported it to the police, and despite their investigation, the vehicle couldn't be recovered. The complainant then filed a claim with the insurer. Still, the claim was rejected, citing a violation of policy terms – specifically, the complainant's failure to inform them of the theft within 48 hours. The complainant argued that he had informed the insurer through the dealer, who assured him the information would be conveyed to the insurer's authorized agent. Since no action was taken, the complainant sent a legal notice to the insurer, asserting that he had not been negligent in reporting the theft and had not violated any policy terms. Due to the claim rejection, the complainant faced financial loss and distress. A Consumer Complaint was filed before the District Forum, seeking an insured amount of Rs.5,50,000 with 12% per annum interest, Rs. 20,000 for mental distress, and Rs. 5,000 for litigation costs. The District Forum ruled in favor of the complainant, but the insurer challenged the order in the state commission of Uttarakhand, which reversed the District Forum's decision. The complaint is a revision petition by the complainant, challenging the state commission's ruling.

Contentions of the Opposite Party

The insurer asserted that the complainant violated the terms and conditions of the insurance policy. The policy explicitly states that a claim for the theft of a vehicle is not payable if the theft is not reported to the insurance company within 48 hours of the incident. However, in this case, the insurer was notified about the theft after the specified 48-hour reporting period had passed. The insurer supported the State Commission's order. On the other hand, the dealer argued that there was no deficiency in their service as they had promptly informed the insurer about the theft of the complainant's vehicle within the stipulated time mentioned in the policy.

Observations by the Commission

The commission observed that the dealer assured the complainant regarding the intimation of the vehicle being stolen to the insurer; however, later it came to the complainant's knowledge that the complainant had to go directly to the insurance company to report the said theft. On the other hand, the insurer argued that there was a clear delay of 18 days in reporting the incident, which violated the policy rules. The commission relied upon the ruling in the case of Gurshinder Singh vs. Shriram General Insurance Company, wherein the Supreme Court ruled that repudiation based solely on the delay in informing the insured cannot approved. In the present case, the intimation to the police station was promptly given on the date of the incident, and both ignition keys were handed over to the insurance company, as confirmed by the surveyor appointed by the insurance company. Furthermore, the surveyor concluded in the report that the case was genuine and recommended settling the claim on its merits. It is an uncontested position that the complainant formally intimated the insurance company about the same in writing. Therefore, the insurance company is not justified in repudiating the genuine claim of the complainant on the ground of delayed intimation.

The commission allowed the revision petition and directed the insurer to pay the Complainant the claim amount @ 7% per annum from the Complaint's filing date until its realization, along with Rs.20,000 as the cost of litigation. However, the order passed by the district forum requiring the insurer to pay the Complainant Rs. 5,000 for physical and mental agony was set aside.