Supreme Court directs insurance companies against being technical

Supreme Court directs insurance companies against being technical

The bench observed that claims were being refused on flimsy grounds

The Supreme Court has ordered the insurance companies not to be too technical and ask for the documents from the insured while settling the claims. It said that in many cases it could be beyond the control of the insured to produce the details.

The bench of Justice MR Shah and Justice BV Nagarathna noted that in many cases it was found that the insurance companies were refusing the claim on technical/flimsy grounds.

Herein, an insurance company had failed to settle a theft insurance claim. Therefore, the insured approached the District Consumer Disputes Redressal Commission (DCDRC), which disposed of the complaint. It directed that the complainant was required to furnish a duplicate certified copy of the certificate of registration of the truck to the insurance company within a month. On receiving the same, the insurance company would settle the claim as per the terms and conditions of the insurance policy.

Thereafter, the insurer applied before the RTO for obtaining a duplicate certified copy of the certificate of registration of the truck. However, the RTO denied it on the ground that due to the report of the theft of the truck, the details regarding the registration certificate had been locked on the computer.

The insurer then approached the insurance company along with the photocopy of the certificate of registration and registration particulars, as provided by the RTO. Despite that, the claim was not settled. He then filed a case in the consumer court.

But the District Commission dismissed the complaint observing that as the complainant had not filed the relevant documents for settlement of the claim, the non-settlement of the claim could not be termed a deficiency in service. The order passed by the District Commission was confirmed by the State Commission and the DCDRC.

The apex court noted that the insurance claim had not been settled mainly because the appellant had not produced either the original certificate of registration or even the duplicate certified copy of the certificate of registration issued by the RTO. However, he had produced photocopies of the certificate of the registration and other registration particulars as provided by the RTO. It also noted that at the time of providing the insurance policy and fulfilling the formalities, the insurance company must have received a copy of the certificate of registration.

The bench recognized that the appellant had tried his best to get the duplicate certified copy of the certificate of registration of the truck. But the RTO had refused to issue it. But still, he had produced the photocopy of the certificate of registration and the registration particulars as provided by the RTO. But the insurance company was becoming too technical while settling the claim and had acted arbitrarily.

The court stated, "The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. In many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. While settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control."

Allowing the appeal, the court held that the appellant was entitled to the insurance amount of Rs.12 lakhs along with interest at the rate of 7 percent from the date of submitting the claim. The court also directed the insurance company to pay the litigation cost of Rs.25,000 to the appellant.