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Insurance
companies, it seems, never learn from their mistakes. Nor do they
listen to the sane advice given by law courts. Law courts and consumer
courts, for example, have repeatedly told insurance companies that (a)
they have to give policy holders all information pertaining to the
policy; and (b) they cannot exploit the ignorance of consumers to deny
a legitimate claim. Obviously, the insurers are not Look at the case of Narayan Singh. When the second-hand car that he had purchased met with an accident and he asked the insurance company to indemnify his loss, the insurance company told him that since the insurance policy had not been transferred in his name, he was not entitled to any relief. The truth was otherwise. But the insurance company had no hesitation in exploiting the ignorance of the consumer. No wonder that the apex consumer court came down heavily on the insurance company and slapped a punitive damage of Rs 1 lakh. Observed the apex consumer court:’’ It appears that in a number of cases, insurance companies are suppressing this regulation (that provides for automatic transfer of the policy from the first to the second owner), and taking advantage of the consumer’s ignorance, deny them the insured amount on the ground that since the insurance has not been transferred, the second owner does not have any insurable interest. It was on May 31, 1995, that Narayan Singh bought from the original owner, a Maruti car. Unfortunately, within just five days of purchase, the car met with an accident. The original owner, from whom he had purchased the car, had insured it for Rs 1,40,00 and it was valid till August 2, 1995. However, the insurance company refused to indemnify his loss on the ground that the insurance policy had not been transferred to the new owner. In order to decide the case, the National Consumer Disputes Redressal Commission referred to two important documents. One was the India Motor Tariff Regulation and the circular issued by the General Insurance Company in 1994 with regard to the transfer of vehicles and the transfer of insurance benefits automatically in favour of the transferee. Quoting the regulation pertaining to "transfers", the apex consumer court said: "On transfer of a vehicle, the benefits under the policy in force will automatically accrue to the new owner. The bonus already applicable for the policy would continue until expiry of the policy. If the transferee wants to change the policy in his name,it may be done on getting evidence of sale and a proposal form duly completed." The other document was the judgement of the Chattisgarh state commission in the case of Ajimuddin vs New India Assurance Company Ltd wherein the commission had said: "It appears that the Tariff Advisory Committee issued a circular regarding automatic transfer of the policy to the new owner/purchaser of the vehicle. In the said circular the decision of the Supreme Court in Complete Insulations (P) Ltd vs New India Assurance Company Ltd was referred to. In the said circular, it is stated that for policies issued as per revised motor tariff, own damage claim which falls within the purview of GR 10 provisions may be settled in full, subject to the other terms and conditions of the policy." On the basis of these facts, the apex consumer court said the insurance company ought not to have rejected the claim on the ground that the vehicle was not transferred in favour of the complainant. Said the commission "Hence, in our view, it is highly improper and unjustified on the part of the insurance company to reject the claim of the vehicle owner.’’ Warning the insurance companies against taking a stand that was contrary to the regulations framed under the India Motor Tariff and also the Insurance Regulatory and Development Authority, the apex consumer court said they would have to face serious consequences in such a case. Said the commission:
‘’We hope that in future the insurance company would be fair and
not exploit the ignorance of consumers while dealing with their
claims. (Narayan Singh vs New India Assurance Company, RP No 556 of
2002). The commission also directed the insurance company to pay the
consumer Rs 1,40,000, with interest at the rate of 12 per cent per
annum calculated from six months from the date of the accident.
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