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WHEnever
insurance companies repudiate a claim, they quote the terms and
conditions of the policy. Here are two cases where the very same terms
and conditions were used by courts to hold the repudiation of the
claims by the insurers to be unjust. In fact there are a lot of
similarities in these two cases decided by the national consumer
disputes redressal commission recently. Both pertained to accidents
involving insured vehicles, and though the insurers were different,
their attitude was similar in that both used flimsy grounds to reject In the case of United India Insurance Company vs Parul Bala, the dispute revolved around a new Cielo car that had met with an accident in 1997. The consumer had bought the vehicle for Rs 5,80,000 from Sundari Lal Oberoi and Company, Dehradun, and even as it was being driven to Delhi, it met with an accident, resulting in extensive damage to the vehicle. However, when the client made a claim, the insurance company rejected it, forcing the consumer to file a complaint before the court. The insurance company ‘s contention before the court was that (a) the car had a temporary registration number in the name of the dealer, and so the client had no insurable interest; (b) the car was being test-driven at the time of the accident, and did not belong to the consumer; and (c) the customer had made the claim 26 days after the accident, and, therefore, it had to be rejected. The court at the district level rejected all of them and asked the insurer to pay the client Rs 4,97,600 along with 12 per cent interest. This was upheld by the courts at the state and the national levels. In response to the contentions raised by the insurance company, the national commission or the apex court pointed out that the car may have had a temporary registration, but the insurance policy, bought by the complainant, had the engine number and the chassis number of the car. Besides, there was proof of the consumer having paid for the car and the insurance. The correspondence between the insurance company and the car purchaser also showed that the insurer had acknowledged the customer as the owner of the car. The apex court also dismissed the plea that the car was being test-driven, saying that no one test-drives a car from Dehradun to Delhi. On the last point that
the insurance company was informed late, the apex court asked the
insurer to produce the policy document and the terms and conditions
that stipulated a time limit within which the company had to be
informed of the accident. In the absence of any such condition, the
company cannot reject the claim on the ground that it was filed late.
(United India Insurance Company vs Parul Bala, RP No 761 of 2004,
decided In the case of National Insurance Company vs Avtar Singh (RP No 1738 of 2005 decided on 23-2-2009), the insurer’s contention was that the Maruti car, which had met with an accident in 2002, requiring repairs to the tune of Rs 1,18,891, had been fitted with a CNG gas kit. Therefore, the claim of the owner could not be entertained as it was not permissible under the rules of the company. Here, too, the court as well as the lower courts held that the insurer had failed to show the terms and conditions that stipulated that a vehicle fitted with CNG could not be insured without the permission of the competent authority. Therefore, there was no justification for rejecting the claim, they said. The insurer was, therefore, asked to pay the client Rs 1,18,891 and costs of Rs 1,000. These two orders make it clear that the terms and conditions are not just binding on the customers. These apply to insurance firms as well. Besides, when a company repudiates a claim, it should have sufficient reasons to justify it and satisfactorily prove it, if required.
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