APPROVAL OF SUB STANDARD CLAIMS BY THE
INSURANCE COMPANIES
When the
insurance company must consider Sub Standard Claim to the insured if cannot
allow total claim, is a question time and again coming before the consumer
courts .Consumers are often confused when in some cases it is total denial of
the claim for the reason deviating from
the terms and conditions of the policy whereas in similar default in other case,
sub-standard claim is approved. For clarity on the subject ,we need to look
into the criterion set by the apex court and apex commission through their
various judgements pronounced from time to time.
In a case
of violation of condition of the policy as to the nature of use of the vehicle,
the claim ought to be settled on non-standard basis HELD BY Hon’ble Supreme Court in
National Insurance Company Ltd. v. Nitin Khandelwal reported in
(2008) 11 SCC 256 and contended that in the case of theft of vehicle, breach of
condition here is not germane. The
brief facts in the case were that Nitin Khandelwal had purchased the vehicle Mahindra Scorpio bearing
No.HR-18-8743 on 28.5.2003. On 27.9.2003, he had sent his vehicle to bring his
children from Jaipur. On the way, some unknown people stopped the vehicle, tied
the driver and dumped him on the way and snatched away the vehicle. The report
was lodged by the driver at the police station and the appellant Insurance
Company was informed. However, the claim of the insured under the policy was
repudiated by the Insurance Company solely on the ground that the vehicle
though registered and insured as a private vehicle, at the time of theft, was
being used as a taxi for carrying passengers on payment. So, the said vehicle
was being used contrary to the terms and
conditions of the insurance policy.Here court observed that using vehicle for
commercial purpose has no role to play in theft incident.
Similar
view was taken by the National Commission in the matter of United India Insurance Co. Ltd. v. Gian Singh [2006 CTJ 221
(CP) (NCDRC)]
In yet another case of Amlendu Sahu v Oriental Insurance Company SLP(C) No.11227/2009, complainant had taken a comprehensive insurance policy in
respect of his private car being No. WB-34C/1919 vide policy
No.311701/3/99/7172 of 1999 and the complainant duly paid the insurance premium too. As per the
complainant, United Bank of India's regional office is his tenant and many of
its employees are known to him. One of its employees had approached the
complainant to hand over the aforesaid vehicle for a few hours for urgent use
by the employees of the Bank. The complainant handed the aforesaid vehicle by
way of a good gesture and did not take any rent from the Bank in this regard.
The vehicle met with an accident during the subsistence of the policy.In this case what is disputed by the insurance company
is that the vehicle was not used for personal use but was given on hire, though
no payment for hiring charges was proved. However, according to the insurance
company, by using the vehicle on hire, the appellant had violated the terms of
the insurance policy and on that basis the insurance company was within its
right to repudiate the claim.
In this case also court
allowed sub-standard claim and directed to pay Rs 2,50,000/- where as claim was
for 5,00000/-
In the landmark judgement by
the apex, in National
Insurance Co. Ltd. v. Swaran Singh & Others (2004) 3 SCC 297 , Supreme Court court has held as under:
"If on facts, it is found that the accident was caused
solely because of some other unforeseen or intervening causes like mechanical
failures and similar other causes having no nexus with the driver not
possessing requisite type of licence, the insurer will not be allowed to avoid
its liability merely for technical breach of conditions concerning driving
licence."
But yet there are different orders in number of cases where
claim has been rejected for the reason of violatation of the terms and condition of the policy .It is
done so keeping in view the facts and circumstances of the case where deviating
from condition is fatal to the situation and deprives the insurance company to
know the real facts of damage.We may refer to a very relevant judgement
pronounced by National Commission which has been further followed by number of
courts. In Appeal No. 321/2005 New India Assurance Company Ltd.
vs. Trilochan Jane, decided on 09-12-2009, the facts in
that case were that the complainant’s vehicle was stolen on 08-04-2000 and he
reported the theft to the police on 10-04-2000, i.e., two days later and
informed the insurance company on 17-04-2000, i.e., nine days later. Counsel
for opposite party argued by referring Nitin Khandelwal case and pleaded for
sub standard claim which was rejected by the commission In the said
judgment, this Commission observed as under:-
‘ The said judgment in National Insurance Company Ltd.
v. Nitin Khandelwal reported in (2008) 11 SCC 256 was in a totally
different context. In the said case, the plea taken by the Insurance
Company was that the vehicle though insured for personal use was being used as
a taxi in violation of the terms of the Policy. . In the present
case, the respondent did not care to inform the Insurance Company about the
theft for a period of 9 days, which could be fatal to the
investigation. The delay in lodging the FIR after 2 days of the
coming to know of the theft and 9 days to the Insurance Company, can be fatal
as, in the meantime, the car could have traveled a long distance or may have
been dismantled by that time and sold to kabadi (scrap dealer).
The above order has set the criterion as to when
non-observance of condition can be considered for sub-standard claimand where
situation does not permit to take lenient stand
Now
again in the recent case decided by the national commission in the matter of Proprietor of Zuber
Transport Sohaibbhai Unusbhai Versus Reliance General Insurance
Co.decided
on 22.07.2013, sub standard claim has
also been rejected. Complainant having
truck no. GJ 9Y6891, insured with the opposite party, was parked outside the
office of Zuber Transport in common plot, when it was stolen early morning and
FIR No. 2/09 dated 01.01.2009 was filed with the police, and the insurance
company was also informed. The
aforesaid truck was later recovered As per the Panchnama prepared by the
police, 11 tyres and plates, nuts were stolen which valued at Rs. 1,75,000/-. The complainant sent the requisite
documents and original bills of Rs. 2,53,908/- to the Insurance Company, but
the company sent a cheque of Rs. 45,441.50/- as full and final
settlement. The complainant
filed Consumer Complaint in the District Consumer Forum. The stand taken by Insurance
Company was that under the terms and conditions of the policy, the tyres of the
truck were not covered. Had the truck not been recovered, the Insurance
Company was liable to pay compensation as per the total loss, but in this case,
the position was different, as the truck had been recovered. There was no deficiency on the part of
the Insurance Company, because they had sent a cheque of Rs. 45,441.50/- to the complainant in
accordance with the reports submitted by the surveyor.
Complainant contended that the claim should have been allowed, at
least on non-standard basis by the Insurance
Insurance company argued the case in the
light of judgements by Hon’ble Supreme Court of India in ‘Export Credit
Guarantee Corporation of India Ltd. Vs. Garg Sons International’, as reported
in 2013 (1) SCALE 410, Suraj Mal Ram Niwas Oil Mills (P.) Ltd. Vs. United India
Insurance Co. Ltd. and Anr. as reported in (2010) 10 SCC 567 and Oriental
Insurance Company Ltd. Vs. Sony Cheriyan as reported in AIR 1999 SC 3252. that the
insured can not claim anything more than what is covered by the insurance
policy
After thoughtful consideration to
the arguments advanced and on perusal of
the record it was held that
“The company shall not be liable
to make any payment in respect of:
(A)
Damages to tyres and tubes unless the vehicle insured is damaged at the same
time in which case the liability of the company shall be limited to 50% of the
cost of replacement
(B)Except in the case of
total loss of the vehicle insured the insured shall not be liable under section
of the policy for loss or the damages to lumps, tyres, tubes, mudguards, bonnet
side parts, bumpers and paint work ….”
In view of the above facts and circumstances of the case
sub-standard claim could not be allowed .
Dr Prem lata Member CDRF
www.consumerawakening.com
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