Insurance firm penalised for unfair trade practices, ordered to pay full IDV and compensation

A Bench of UT State Consumer Commission has directed New India Assurance Company to pay full Insured Declared Value (IDV) of Rs 22 lakh of a car, which was damaged in an accident along with nine per cent interest to a woman.

The bench said forcing a consumer to file an affidavit in favour of the insurance company regarding acceptance of claim amount as full and final payment was an unfair practice.

The commission has also directed the insurance company to pay Rs 1 lakh as compensation and Rs 33,000 as litigations costs to the consumer.

Renu Bala, a resident of Zirakpur, in a complaint filed through advocate Pankaj Chandgothia, said her vehicle was insured with the insurance company for an IDV of Rs 22,00,000.

The vehicle met with an accident on August 01, 2023.

The accident allegedly took place while trying to avoid an animal, which suddenly appeared before the vehicle and no third party was involved in the accident.

Advocate Pankaj Chandgothia contended that the insurance company refused to treat the vehicle as total loss even though the vehicle had got extensively damaged and its repair estimate was more than the IDV of the vehicle.

He alleged the insurance company kept on lingering the matter and rather compelled her to furnish a consent in the shape of an affidavit that she accepts the amount of Rs 16.5 lakh towards full and final settlement and would not claim any further amount from the insurance company, which is contrary to the basic principle of insurance.

“On the other hand, the insurance company denied the allegations and claimed that the complainant has not supplied all the required documents,” he said.

After hearing the arguments, the Bench headed by Padma Pandey held the New India Assurance Company guilty of unfair trade practise, and directed the company to pay the full IDV value of Rs 22 lakh, along with nine per cent interest, Rs one lakh as compensation and Rs 33,000 as litigations costs to the insured.

The commission said the affidavit obtained by the insurance company prima facie constituted an unfair contract as it bound the complainants to accept only an amount of Rs 16,50,000 as against the due claim IDV of Rs 22,00,000.