- Setting aside an order of the National Consumer Disputes Redressal Commission (NCRDC), the Hon’ble Supreme Court (SC), in Jaina Construction Company v The Oriental Insurance Company Limited &Anr has held that insurance claims cannot be denied merely on the basis that there was a delay in intimation of the same to the Insurance Company.
- The question before the SC was whether the Insurance Company could repudiate the claim made bythe owner, which was duly insured, merely on the ground that there was a delay in informing the Insurer about the theft ofvehicle.
- The Appellant-Complainant (Construction Co.) had its truck stolen by some miscreants and an FIR was registered under Section 395 of the Indian Penal Code (IPC). The accused was arrested; however, the vehicle could not be traced and an untraceable report was filed. Subsequently, the Complainant lodged a claim with the Insurance Co. but the latter failed to settle the claim within a reasonable time.
- Aggrieved, the Appellant filed a consumer complaint with the District Consumer Redressal Forum. During the pendency of this complaint, the Insurance Co. repudiated the claim of the Appellant stating that the latter committed a breach by informing the company more than 5 months after the loss of the vehicle whereas, the policy mandated an immediate notice.
- The District Forum allowed the Appellant’s claim with cost. This award was also upheld by the State Consumer Redressal Commission, in addition to partly allowing the Appellant’s of an enhanced compensation. However, the NCRDC allowed the Insurance Co’s revision petition.
- The SC, referring to an earlier decision by a three judge Bench in Gurshinder Singh v Shriram General Insurance Company Lts d &Anr, remarked that the Insurance Company did not reject the claim on genuineness of the claim but on account of delay intimation and this was clearly in violation of the ratio settled by the SC in the aforementioned. Thus, the appeal as dismissed.
- In the case of Gurshinder Singh (Supra), the SC held that the term “co-operate” used in Insurance contracts must be assessed having regard to facts and circumstances of each case. In an Insurance contract much would depend on the words “co-operate” and “immediate” in Condition 1 of the standard commercial vehicle policies.
- While assessing the “duty to co-operate” for theinsured, the court should have regard to those breaches by the insured which are prejudicial to the insurance company. Mere delay in informing the theft when the same was already informed to lawenforcement authorities, cannot amount to a breach of “duty to cooperate” on part of the insured.
- The reason Insurance Company insist on an immediate intimation so that a surveyor can be assigned to assess the extent of damages. In a case where a FIR has been filed and the Police successfully recovers the vehicle, the need to intimate the Insurer does not arise. It is only when the Police are unable to trace and recover the vehicle, the insured will be in a position to lodge a complaint with the Insurance company. Therefore, delay in intimation when a FIR had been lodged is not ground to deny an insured’s claim.
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