Rejecting Claims On Purely Technical Grounds Undermines Trust In Insurance Industry: NCDRC

Brief Facts of the Case

The complainant insured his tractor with HDFC General Insurance/insurer and reported that his tractor broke down and was stolen. Despite efforts to locate it and an FIR being filed, the tractor was never recovered. After completing all required procedures, the complainant submitted an insurance claim, which was initially delayed but later rejected by the insurer as 'no claim'. Dissatisfied, the complainant filed a complaint with the District Forum, which was dismissed. The complainant then appealed to the State Commission, which allowed the appeal. Consequently, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer argued that the State Commission failed to acknowledge a significant delay of six days in lodging the FIR and over a month in notifying the insurer. This delay, coupled with the violation of policy terms, was not properly considered. The insurer contended that the vehicle was being used for hire and reward, which was against the policy conditions. The insurer emphasized that delays in reporting to the police or the insurer hindered any investigation and reduced the chances of recovering the stolen vehicle.

Observations by the National Commission

The National Commission observed that in Gurshinder Singh v. Shriram General Insurance Company Ltd. and Om Parkash v. Reliance General Insurance, the Supreme Court emphasized that denying a claim solely due to a delay in notifying the insurance company about the theft is overly technical. The Court held that if the FIR was filed promptly after the theft and the police issued a final report after failing to trace the vehicle, a delay in informing the insurer should not be a reason to deny the claim. The commission observed that the Consumer Protection Act aims to better protect consumers, and the contract should be interpreted to favor the party with less bargaining power. Given these principles, the Commission found that the delay in lodging the FIR and informing the insurer could be condoned, especially since the complainant argued that the police delayed the FIR, a fact difficult to prove. The Commission determined there was no illegality or material irregularity in the State Commission's order and thus upheld it. Consequently, the Revision Petition was dismissed.

Case Title: HDFC Ergo General Insurance Co. Ltd. Vs. Ram Lal Balai

Case Number: R.P No. 1004/2016