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A consumer recently told me about the problems that he was having with an insurance company . "I have had this householder’s policy for years and I have diligently paid the premium. But now when I need them to make good the loss that I suffered following a theft, they are coming up with all kinds of excuses not to pay. I am now left wondering whether I did the right thing in buying the policy at all", he said. His experience with the insurance company is not unique. Insurance companies often spend considerable time and energy to defeat the just claims of policy holders. They first try to repudiate the claim on some pretext or the other. If the consumer persists, they offer to pay a considerably reduced amount, as if they are doing the claimant a great favour. It’s a psychological game and they often win — because by then the consumer, who would have suffered the loss , would not only be in financial distress, but also be wondering whether he would get any money at all. So eventually he would agree to the sum offered, albeit reluctantly. He is then asked to put his signature on the ‘discharge voucher,’ saying that the amount is being accepted as a full-and-final settlement, thereby discharging the insurance company of any further liability. Since the insurer will not release the money unless the consumer signs this (nor will they pay if the consumer accepts the amount "under protest" ) the policy holder has no option but to sign.
A recent case decided by the apex consumer court is an example. In this case, following the destruction of his rice mill in Uttar Pradesh due to a heavy storm, the policyholder sought indemnification of his loss. The insurance company paid Rs 3,28,000 and got the consumer to sign the "full-and-final" settlement voucher. Subsequently, when he sought to get an additional amount from the insurer by filing a consumer complaint, the insurance company argued that his right was extinguished with the signing of the settlement letter. The apex consumer court agreed with the insurance company. While doing so, it pointed out that the consumer had not raised any plea of fraud, misrepresentation, undue influence or coercion. Even his objection letter written to the insurance company was belated- sent ten to eleven months after signing the settlement voucher. So the consumer now cannot seek an additional amount form the insurance company, the Commission said. (M/s Shiv Ram Gramodyog Sansthan Vs United India Insurance , RP o 3689 of 2009) In support of this decision, it quoted the Supreme Court in United India Insurance versus Ajmer Singh Cotton & General Mills & Ors. [II (1999) CPJ 10 (SC)), wherein the court had held that "The mere execution of the discharge voucher would not always deprive the consumer from preferring a claim with respect to the deficiency in service or consequential benefits arising out of the amount paid in default of the service rendered. Despite execution of the discharge voucher, the consumer may be in a position to satisfy the Tribunal or the Commission under the (Consumer protection) Act that such discharge voucher or receipt had been obtained from him under the circumstances which can be termed as fraudulent or exercise of undue influence or by mis-representation or the like. If in a given case the consumer satisfies the authority under the Act that the discharge voucher was obtained by fraud, mis-representation, under influence or the like, coercive bargaining compelled by circumstances, the authority before whom the complaint is made would be justified in granting the appropriate relief under the circumstances of each case". Where the consumer is unable to show any of those circumstances, the courts or the tribunals will not be able to grant any relief, the Supreme Court had said in this case. So consumers would do well to always remember this.
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Insurance companies often spend considerable time and energy to defeat the just claims of policy holders. If the consumer persists, they offer to pay a reduced amount
Keeping in mind this
entire scenario, the courts have come to the rescue of consumers and
held that even after signing the discharge voucher, consumers can
still seek the help of the court to get what is due to them from the
insurer. However, the consumer in such cases has to meet certain
conditions. The policyholder has to show that the amount was accepted
under coercion (or coercive bargaining prompted by circumstances) or
undue influence exerted by the insurer or on account of fraud or
misrepresentation. The courts have also said that immediately after
signing the discharge voucher, the consumer would do well to send a
letter to the insurer, describing the circumstances under which he/she
was forced to sign the voucher and accept the amount offered..
Unfortunately, consumers are not aware of these and therefore
sometimes lose out here too.