Haryana State Commission Holds National Insurance Company Ltd Liable For Wrongful Repudiation Of Claim

Brief Facts:

Mr Pradeep Dayma (“Complainant”) purchased a Hyundai Hydraulic Excavator Machine (“Machine”) for Rs. 51,00,000/- from Unity Earthtech (“Dealer”). The said machine was financed by HDB Financial Services Limited (“Financer”). The Complainant availed insurance policies for the said machine from National Insurance Company Ltd. (“Insurance Company”) by paying a premium of Rs. 18,768.

After the purchase, the Complainant rented the machine to a 3rd-party. A landslide occurred and the machine got buried under earth and debris of stone. The Complainant informed the Dealer through phone calls. An inspection was conducted by the Dealer, who then released an inspection report mentioning that the machine could not be inspected as it was covered under earth debris. The Insurance Company also assigned a surveyor to assess the incident. Post this, the Insurance Company sent a notice to the Complainant that he failed to inform them timely and requested additional documents. However, even after 1 year of such an incident, the Dealer and the Insurance Company failed to provide any remedy to the Complainant. Feeling aggrieved, the Complainant filed a consumer complaint in the State Consumer Disputes Redressal Commission, Punjab (“State Commission”).

The Dealer contended that any damages suffered by the Complainant have to be assessed by the Insurance Company. Further, it restricted its role just to assessment of the damage which is further to be submitted to the Insurance Company. Due to the landslide and complete burial of the machine, it was not possible to assess it.

The Insurance Company contended that the machine was financed by the Financer and the Complainant was not entitled to the payment. Further, the Financer already informed them that the machine was rented to a 3rd-party, therefore, the question of payment did not arise. It also contended that the Complainant was not a customer as he rented the machine for commercial purposes.

Observations by the Commission:

The State Commission observed that the machine suffered extensive damage in the landslide incident, as evidenced by the field service report and photographs. Despite the Complainant promptly informing the Dealer about the accident, the Insurance Company attempted to evade liability by claiming late intimation of the loss and disputing the nature of the damage. The estimated loss exceeded the insured value of the machine, supporting the Complainant's claim.

Regarding the Insurance Company's argument about delayed intimation, the State Commission cited legal precedents to reject the notion that delayed intimation justified claim rejection. They emphasized that the Insurance Company's surveyor report confirmed the extent of the loss, and it admitted liability up to the assessed amount.

Additionally, the State Commission dismissed the Insurance Company's argument regarding the Complainant's status as a consumer, citing the rental agreement as evidence that the Complainant rented out the machine for livelihood purposes. Consequently, the State Commission ruled that the Insurance Company was liable to indemnify the complainant up to the assessed loss amount, with interest, along with Rs. 20,000/- as compensation for harassment and Rs. 20,000/- for litigation expenses.