Delay In Informing Insurer Of Theft Shouldn't Automatically Repudiate Insurance Claim: NCDRC

Brief Facts of the Case

The complainant, the owner of a vehicle, insured it with National Insurance/Insurer. Soon after, the complainant reported that the vehicle was stolen. A complaint was filed with the police, but the vehicle was not recovered. The complainant submitted a claim to the insurance company, which was subsequently denied. The complainant filed a complaint before the District Forum, which dismissed the complaint. The complainant appealed to the State Commission of Gujarat, which partly allowed the complaint and directed the insurer to pay 60% of the claim amount. Consequently, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer argued that the complainant violated the insurance policy's terms and conditions. The policy required that theft be reported to the insurance company immediately, but the complainant reported it only after a significant delay and filed the FIR late as well. Additionally, they claimed the vehicle had been sold to someone else, and the complainant no longer had an insurable interest. They also noted discrepancies in the complainant's signatures on various documents. The insurer sought to overturn the State Commission's order, favoring the District Forum's decision.

Observations by the National Commission

The National Commission observed that in Jaina Construction Committee v. Oriental Insurance Co. Ltd., the Court held that although there was a delay in notifying the insurance company, the claim could not be denied solely on this basis, given that the theft was reported promptly to the police and the claim was verified as genuine. Furthermore, the commission cited the case of Dharmender v. United India Insurance Co. Ltd., wherein the Court ruled that a 78-day delay in notifying the insurance company about a stolen vehicle did not justify repudiating the claim, as the delay was not due to any lack of genuineness but rather procedural. Additionally, in Gurshinder Singh v. Shriram General Insurance Company Ltd., the Court emphasized that delays in informing the insurer when the theft was promptly reported to law enforcement and verified as genuine should not automatically invalidate the claim. The interpretation of insurance policy terms should consider the context and the parties' intentions, avoiding overly technical refusals of valid claims. The National Commission did not find any irregularities with the State Commission's order and upheld it. Consequently, the revision petition was dismissed

Case Title: National Insurance Company Limited Vs. Premaji Babuji Oad

Case Number: No. 1352/2022