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This order of the National Consumer Disputes Redressal Commission has its origin in the theft of a vehicle owned by the complainant, Pratima Jha and the rejection of her claim by the insurance company on the ground that the vehicle was not registered at the time of theft. The vehicle, Mahindra Bolero, purchased in September 2008, had been insured for Rs 5,62,400 after paying an insurance premium of Rs 20,242 by the owner. Just six months later, on March 21, 2009, the vehicle unfortunately was stolen, giving rise to a claim. The insurance company however repudiated the claim on the ground that the vehicle had no valid registration at the time of theft. Since this amounted to violation of the provisions of the Motor Vehicles Act, it was considered a violation of the terms of the insurance policy and, therefore, the insured amount was not payable, the insurance company told the claimant. Before the consumer court too, the insurance company pointed out that Section 39 of the Motor Vehicles Act clearly prohibited the use of an unregistered vehicle. Further, Section 43 of the MV Act also specified that a temporary registration was valid only for one month, except under certain circumstances allowed in the provision. Since in this case, the temporary registration, valid for one month, had obviously expired (at the time of theft) there was clearly a violation of the MV Act. And this amounted to breach of the terms of the insurance policy, the insurer argued. It could however not show any specific term in the policy to support this averment, resulting in the District Consumer Disputes Redressal Forum observing that there was nothing in the insurance policy to discharge the insurer from its liability on grounds of non-registration of the vehicle. It, therefore, directed the insurance company to pay the insured amount of Rs 5,62,400, along with Rs 7,600 towards compensation to the consumer. The State Consumer Disputes Redressal Commission, before which the insurer filed an appeal, agreed with the decision of the lower consumer court and said there was nothing to support the claim of the insurance company that it would stand exonerated from its liability in the event of violation of any provision of the law by the insured. It also pointed out that a perusal of the papers of the consumer indicated that the RTO had permitted the vehicle owner to use the vehicle beyond one month as there was a second endorsement by the RTO after the expiry of one month. In its revision petition before the National Commission, the insurance company again argued that there was a clear violation of the Motor Vehicles Act in that the vehicle was not registered at the time of theft. And the contract of agreement between the insurer and the insured would fail on this very ground, irrespective of an express provision to this effect in the terms and conditions of the contract. The apex consumer court pointed out that in an earlier case, the Commission had clearly held that the insurance company was not entitled to repudiate the claim merely on the ground that the vehicle had not been registered. This view was again reaffirmed. It saw no reason to interfere with the orders of the lower consumer courts in this case, the Commission said. I would advise consumers not to ignore the registration of their vehicles, as under the Motor Vehicles Act, due registration of the vehicle is mandatory, so also third party insurance. Importantly, vehicle insurance must be renewed on time and without fail because often consumers have lost their right to claim the insured amount due to the failure to renew.
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CAN an insurance company
reject an insurance claim on a vehicle merely on the ground that the
vehicle was not duly registered? Insurance companies may argue that
they can, but the apex consumer court has made it clear that they
cannot repudiate a claim on such a ground.