Pay Compensation For The Stolen Vehicle: Mumbai District Commission Holds Royal Sundaram General Insurance Liable For Deficiency In Service And Unfair Trade Practice

It held that the action of the Insurance Company in causing unreasonable delay and rejecting the claim constitutes a deficiency in service and unfair trade practice.

Brief Facts:

The Complainant bought a Mahindra Scorpio Vehicle in December 2014 for a total amount of Rs. 14,41,162/- and was insured by the Insurance Company for one year. The Insurance Company provided a cover note with an Insured Declared Value (IDV) of 7,00,000. It also issued a Certificate of Insurance and Policy Schedule under a Private Car Package Policy.

Unfortunately, the vehicle was stolen on March 17, 2018, from Dindoshi, Mumbai. The Complainant immediately reported the theft to the Dindoshi Police Station, and an FIR was registered. He also informed the Insurance Company about the theft on March 24, 2018. Following the Insurance Company's requirements, he submitted the necessary documents and maintained communication with them regarding the claim. Despite his requests for a swift settlement, the Insurance Company intentionally delayed processing the claim.

On December 13, 2018, the Insurance Company rejected the claim stating that there was no valid insurance cover for the vehicle on the date of the loss. The Complainant made further attempts to contact the Insurance Company, including a legal notice urging them to settle the claim. However, the Insurance Company disregarded these communications.

The Complainant filed a consumer complaint alleging deficiency in service and unfair trade practices before the Commission.

During the pendency of the complaint, the vehicle was located in Rajasthan in December 2019 and returned to the Complainant. However, its use was restricted due to its involvement as evidence in a drug trafficking case. The vehicle's color was also changed from black to white when it was stolen leading to the non-operation of the insurance policy. The vehicle has been stored in the garage only of the Complainant. The amended complaint was also delivered to the Insurance Company. However, no defense was presented by the Insurance Company.

Observations of the Commission:

The District Commission allowed the complaint and observed that the said vehicle was insured by the Insurance Company under a Private Car Package Policy from March 13, 2018, to March 12, 2019.

Further, the Complainant was also unable to use the vehicle due to it being an evidence in a drug trafficking case. The vehicle's color was changed during the theft, and the imposed court order prevented any change, sale, or transfer of the vehicle. Additionally, the vehicle's color variation made it ineligible for further insurance coverage. As a result, the vehicle remained in the Complainant's garage, unusable and uninsurable. Moreover, the provided documents, supporting the Complainant's stance, were unchallenged as the Insurance Company failed to appear before the Commission.

The Commission held that the action of the Insurance Company in causing unreasonable delay and rejecting the claim constitutes a deficiency in service and unfair trade practice.

In conclusion, the Commission directed the Insurance Company to pay compensation up to the IDV of the vehicle, i.e., 7,00,000 with an interest rate of 12% per annum from December 13, 2018, to the Complainant. Additionally, pay Rs. 1 Lakh for mental distress and Rs. 30,000 as litigation costs.

Case Title: Mr. Navin Jagdish Kankre vs. Royal Sundaram General Insurance Company Ltd.

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