While Settling Claims, Insurance Company Should Not Seek Documents Which Are Beyond The Control Of Insured To Furnish: Supreme Court

The Supreme Court observed that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control. 

The bench of Justices MR Shah and BV Nagarathna noted that, in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds.

Background

In this case, as Insurance Company failed to settle a theft insurance claim, the insured approached the District Consumer Disputes Redressal Commission which disposed of the complaint with the direction that he would furnish duplicate certified copy of the certificate of registration of Truck to the insurance company within a month and that the insurance company within a month after receiving the same would settle the claim as per the terms and conditions of the insurance policy. He then submitted an application before the RTO for obtaining duplicate certified copy of the certificate of registration of the Truck in question. However, RTO denied to issue duplicate certified copy of the certificate of registration on the ground that due to the report of the theft of the Truck, the details regarding registration certificate on the computer has been locked. Thereafter, he submitted an application before the insurance company along with photocopy of the certificate of registration and registration particulars, as provided by the RTO. Despite the above, the claim was not settled and therefore, he filed a fresh consumer complaint. The District Commission  dismissed the said complaint by observing that as he had not filed the relevant documents for settlement of claim therefore, the non settlement of the claim cannot be said to be deficiency in service. This order passed by the District Commission has been confirmed by the State Commission and thereafter, by the National Consumer Disputes Redressal Commission.

In appeal, the Apex Court bench noted that the insurance claim has not been settled mainly on the ground that the appellant has not produced either the original certificate of registration or even the duplicate certified copy of certificate of registration issued by the RTO. However, the appellant did produce photocopy 5 of certificate of registration and other registration particulars as provided by the RTO, the bench noted.

Even, at the time of taking the insurance policy and getting the insurance, the insurance company must have received the copy of the certificate of registration. Therefore, the appellant had tried his best to get the duplicate certified copy of certificate of registration of the Truck. However, because of the report of theft of the Truck, the details of registration on the computer have been locked and the RTO has refused to issue the duplicate certified copy of registration. Therefore, in the facts and circumstance of the case, when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non settlement of claim can be said to be deficiency in service.

Insurance companies are refusing the claim on flimsy grounds and/or technical grounds.

The court also observed that in this case the insurance company has become too technical while settling the claim and has acted arbitrarily.

"The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non­ submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control. In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control."

Allowing the appeal, the court held that the appellant is entitled to the insurance amount of Rs. 12 lakhs along with interest @ 7 per cent from the date of submitting the claim.The court also directed the insurance company to pay the litigation cost of Rs. 25,000 to the appellant.

Case details

Gurmel Singh vs Branch Manager, National Insurance Co. Ltd. | 2022 LiveLaw (SC) 506 | CA 4071 OF 2022 | 20 May 2022

Coram: Justices MR Shah and BV Nagarathna

Headnotes

Insurance  - Insurance companies refusing claim on flimsy grounds and/or technical grounds - While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control. (Para 4.1)

Consumer Protection Act, 1986 ;  Section 2(g) - Insurance - Deficiency in Service - When the insured had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non settlement of claim can be said to be deficiency in service. (Para 4)

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