Rejection Of Insurance Claim Valid If Insured Does Not Follow Policy Terms: Delhi State Commission Reject Claims Of Deficiency Against National Insurance

Brief Facts of the Case

The complainant's late husband owned a TATA truck insured with National Insurance/insurer since purchase. The vehicle was stolen, and the complainant informed the insurer and submitted all required documents. As an elderly woman with health issues, she struggled with the formalities of transferring the vehicle's ownership after her husband's death. Her son later approached the insurer to request a name change on the policy but was told to first update the vehicle's ownership with the RTO. Efforts to complete this process were delayed, and the theft occurred during this time. Although the insurance was active during the theft, the insurer rejected the claim, alleging issues with ownership transfer. The complainant filed a complaint before the District Commission, which dismissed it, leading to the filing of the present appeal before the State Commission.

Contentions of the Insurer

The insurer argued that the complainant did not inform them regarding the death of the policy holder. Furthermore, it was highlighted that the renewal payment for the policy was made through a joint account owned by the deceased and his son. Hence, the insurer had no reason to know about the death, making the complainant's claims false and frivolous.

Observations by the State Commission

The State Commission observed that the main issue was whether the District Commission's order was flawed. The vehicle was registered in the complainant's late husband's name and insured by the insurer. According to policy terms, in case of the insured's death, the policy remains valid for three months or until expiry, whichever comes first. The policy was renewed after the husband's death, but the name on the policy was not updated, and no evidence was provided to show a request for a name change. The complainant claimed her son informed the insurer about the death two months later, but no proof was submitted. Furthermore, there was also no evidence of ownership transfer in the vehicle's registration. Consequently , the Commission observed that the insurer was justified in rejecting the claim as the complainant did not follow the policy's terms requiring the legal heirs to apply for a name change within three months. Hence, the State Commission upheld the District Commission's decision and dismissed the appeal.

Case Title: Ms. Ramesh Kumari Vs. National Insurance Co. Ltd.

Case Number: F.A. No. 315/2018

Click Here To Read/Download The Order