Order Name: National Consumer Disputes Redressal Commission vs Oriental Insurance
In a recent judgement, the National Consumer Disputes Redressal Commission (NCDRC) found Oriental Insurance responsible for a lack in service regarding an insurance claim cancellation. The cancellation was entirely based on the delayed notification from the claimant about the theft of their insured vehicle.
The claimant had insured his vehicle with Oriental Insurance through an agent situated in the vehicle dealer’s showroom. Unfortunately, the vehicle was stolen. Despite immediately reporting the theft to the police, the vehicle was not recovered. The claimant then filed a claim with the insurance company. The claim was rejected by Oriental Insurance due to a breach of the policy terms, specifically, the failure of the claimant to inform them about the theft within 48 hours.
The claimant, however, argued that they had informed the insurance company through the dealer. They were assured that the information would be forwarded to the insurance company’s authorised agent. Since no action was taken, the claimant sent a legal notice to the insurance company. They argued that they had not been negligent in reporting the theft and had not violated any policy terms.
The claimant was put under financial strain due to the claim rejection. They filed a Consumer Complaint before the District Forum. They sought an insured amount of Rs.5,50,000 with 12% per annum interest, Rs. 20,000 for mental distress, and Rs. 5,000 for litigation costs. While the District Forum ruled in favour of the claimant, the insurance company challenged the order in the state commission of Uttarakhand. The state commission reversed the District Forum’s decision. The claimant then filed a revision petition challenging the state commission’s ruling.
Oriental Insurance claimed that the claimant had violated the terms and conditions of the insurance policy, which states that a claim for vehicle theft is not payable if the theft is not reported to the insurance company within 48 hours of the incident. In this case, the insurance company was notified about the theft after the stipulated 48-hour period. The insurance company backed the State Commission’s order. Meanwhile, the dealer argued that they had promptly informed the insurance company about the vehicle theft within the specified time mentioned in the policy.
The NCDRC noted that the dealer had assured the claimant that they would notify the insurer about the vehicle theft. However, it was later revealed that the claimant needed to directly report the theft to the insurance company. While the insurance company argued that there was an 18-day delay in reporting the incident, violating the policy terms, the NCDRC referred to a previous case, Gurshinder Singh vs. Shriram General Insurance Company. The Supreme Court had ruled in that case that rejection based solely on the delay in notifying the insurer cannot be approved.
The NCDRC observed that in the present case, the claimant had promptly informed the police station about the theft and had handed over both ignition keys to the insurance company. The insurance company’s surveyor had confirmed these facts. Furthermore, the surveyor had recommended settling the claim based on its merits after concluding that the case was genuine. The NCDRC ruled that the insurance company was not justified in rejecting the claim based on delayed notification.
The NCDRC accepted the revision petition and directed Oriental Insurance to pay the claimant the claim amount with a 7% per annum interest from the date of the complaint filing until its realization. They were also ordered to pay Rs.20,000 for litigation costs. However, the order by the district forum that required the insurer to pay the claimant Rs. 5,000 for physical and mental agony was dismissed.
In summary, this judgement serves as a reminder that insurance companies cannot reject claims based solely on delayed notification. It underpins the importance of a fair and thorough investigation of all claims. It also underscores the role of intermediaries like vehicle dealers, highlighting the need for better communication and transparency.
