NCDRC Holds ICICI General Insurance Liable For Deficiency In Service Over Denial Of Insurance Claim

Brief Facts of the Case

The complainant owned a Tata Sumo and had an insurance policy with ICICI Lombard General Insurance/insurer for one year. Later, the vehicle was stolen, and the complainant reported the theft to the police the next day, subsequently lodging a formal complaint a week later. He also informed the insurer about the theft shortly after. However, the insurer rejected the claim, citing a violation of condition No. 1 of the policy due to an 8-day delay in notifying the police and a 16-day delay in informing the insurer. In response, the complainant filed a consumer complaint before the District Forum, which allowed the complaint. It directed the insurer to pay the insured amount of Rs.4,40,000 of Rs.5,000 for mental, physical and mental agony along with Rs.2000 for legal expenses. Aggrieved, the insurer appealed before the State Commission of Uttar Pradesh, which allowed the appeal and overruled the District Forum's order. Consequently, the complainant approached the National Commission with a revision petition.

Contentions of the Insurer

The insurer denied all allegations in the complaint. While confirming that the vehicle was insured, they stated that the policy had specific terms and conditions. The insurer argued that the complainant did not promptly report the theft to the police or notify them, claiming that the repudiation of the insurance claim was not solely based on the delay in lodging the FIR but was due to breaches of essential policy conditions. They contended that these delays hindered both parties' ability to search for the vehicle effectively. Consequently, the insurer asserted there was no deficiency in service and requested that the complaint be dismissed.

Observations by the National Commission

The National Commission observed that the key issue was whether the insurer's repudiation of the claim on the grounds of delay in reporting was consistent with the policy terms. The insurer rejected the claim based on alleged suppression of facts and violation of policy conditions, noting that the complainant reported the theft to the insurer with a delay of 16 days and lodged the FIR with an 8-day delay. The Hon'ble Supreme Court in Surendra Kumar Bhilawe vs. The New India Assurance Co. Ltd. stated that the insurer could not avoid liability based on ownership transfer if the insured maintained ownership of the vehicle at the time of the accident. In Jaina Construction Committee v. Oriental Insurance Co. Ltd., the Court ruled that even though the complainant delayed notifying the insurer by five months, the insurer had not disputed the genuineness of the claim but merely cited delay as the reason for repudiation. The Court in Dharmender vs. United India Insurance Co. Ltd. also indicated that claims should not be denied solely due to notification delays, as long as the theft was reported to law enforcement. Furthermore, in Gurshinder Singh vs. Shriram General Insurance Co. Ltd., the Court emphasised that cooperation should be assessed based on whether the insured's actions prejudiced the insurer. It stated that mere delay in informing the insurer after reporting to the police does not constitute a breach of duty.

In light of these rulings, the Commission concluded that minor delays in notifying the insurer should not be grounds for claim denial, upheld the decision of the District Forum and setting aside the State Commission's order.

Case Title: Pradeep Kumar Yadav Vs. ICICI Lombard General Insurance Co. Ltd.

Case Number: R.P. No. 1662/2022

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