Theft of vehicle, mere delay in informing the insurance company cannot be a ground to deny the claim

National Consumer Commission Upholds State Commission's Decision on Insurance Claim Settlement. Bajaj Allianz's Revision Petition Dismissed; Delay in Theft Reporting Not a Valid Ground for Claim Repudiation

In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) in New Delhi upheld the decision of the Bihar State Consumer Disputes Redressal Commission, directing Bajaj Allianz General Insurance Company to settle a claim on a non-standard basis for a theft case. The judgment was delivered by a bench comprising AVM J. Rajendra, AVSM VSM (Retd.), and Mr. Anoop Kumar Mendiratta.

The case involved the theft of a Mahindra Bolero Jeep insured by Bajaj Allianz. The State Commission had directed the insurer to pay 75% of the assured amount along with interest and compensation, which was contested by Bajaj Allianz through a revision petition.

The core issues revolved around two main grounds for repudiation by the insurance company: the vehicle being allegedly used for commercial purposes and the delay in notifying the insurance company about the theft. However, the NCDRC reiterated the established legal principle that mere delay in notifying the insurer cannot be a sole ground for denying claims, especially when the FIR is promptly lodged and the claim is found genuine upon investigation.

The NCDRC observed that the nature of use of the vehicle does not constitute a fundamental breach unless explicitly excluded in the policy terms. Furthermore, it emphasized that the interpretation of policy conditions should remain consistent across both public and private insurers, aligning with Article 14 of the Constitution of India, ensuring non-discrimination.

The ruling comes after Bajaj Allianz argued that private insurance players should not be bound by the same guidelines applicable to public sector insurers. However, the commission found this argument unpersuasive, stressing that arbitrary methodologies in interpreting insurance policy terms violate constitutional principles of equality.

The dismissal of the revision petition signifies a reinforcement of consumer rights in insurance claims and mandates transparency in policy terms at the time of issuance. The judgment aligns with precedents set by the Supreme Court, promoting fairness in insurance claim settlements.

Bottom Line:

In cases of theft of vehicle, mere delay in informing the insurance company cannot be a ground to deny the claim if FIR is lodged promptly, and investigation shows the claim to be genuine. Also, distinction between public and private insurance companies regarding settlement of claims on non-standard basis is violative of Article 14 of the Constitution of India.

Statutory provision(s): Article 14 of the Constitution of India, Consumer Protection Act, Insurance Regulatory Act, 1972

Bajaj Allianz GIC Ltd. v. Yugal Ram, (NCDRC)(New Delhi) : Law Finder Doc Id # 2818247