Consumer Panel Rules in Favour of Consumer, Rejects Insurance Company's Claim of Delayed Information

Consumer Panel Rules in Favour of Consumer, Rejects Insurance Company's Claim of Delayed Information

The East Delhi District Consumer Disputes Redressal Commission (CDRC), chaired by S.S. Malhotra alongside Rashmi Bansal and Ravi Kumar, upheld a consumer's complaint against an insurance company for wrongfully rejecting a claim arising from the theft of his E-rickshaw. Despite delays in reporting the incident and filing a police report due to circumstances beyond the complainant's control, the CDRC recognised the validity of the insurance policy and the distressing circumstances surrounding the theft.

After a thorough examination, the commission concluded that the insurance company's rejection of the complainant's claim constituted a deficiency in service. Consequently, the commission ordered the insurance company to reimburse the complainant with the insured value of the vehicle, including interest, compensate the vehicle owner for the mental anguish and harassment endured, and cover the litigation costs incurred.

An insurance claim was filed by Adwait Haldar (Complainant) against Magma HDI Gen. (Opposite Party) for the theft of his E-rickshaw. The insurance policy, with an Insured Declared Value (IDV) of ₹99,970, was in force from June 30, 2017, to June 29, 2018. Haldar had paid a premium of ₹6,468 to the insurance company for the policy.

During the midday hours of January 5, 2018, between 12:00 PM and 12:30 PM, Haldar's E-rickshaw was stolen while parked near a local tea stall. The incident occurred as Haldar was having tea at the stall when he was unknowingly intoxicated by the thieves using a hanky. Following the incident, Haldar was immediately hospitalised and remained under medical care until January 11, 2018.

Upon his discharge from the hospital, Haldar attempted to file an FIR at the local police station but encountered technical difficulties with the server, resulting in the delay of the FIR registration until January 14, 2018. Haldar promptly informed the insurance company about the incident and submitted a claim on January 17, 2018, accompanied by all necessary documentation to substantiate his claim. Despite providing the requested information, the insurance company rejected his claim on March 8, 2018, without providing adequate justification. Disputing the insurance company's actions as unlawful and unjustified, Haldar filed a consumer complaint seeking compensation and a refund of the insurance amount.

In response to the consumer complaint, Magma HDI Gen acknowledged that the complainant held a valid insurance policy for his vehicle. However, they disputed the complainant's good faith, citing the significant time lapse between the theft and the notification to the insurance company.

Additionally, they raised concerns regarding the nine-day delay in registering an FIR, which is a mandatory legal requirement in cases of theft.

Furthermore, the insurance company pointed out that the FIR mentioned that the stolen vehicle's keys were left in the ignition, which they argued violated the insurance policy conditions as it indicated a lack of reasonable precautions taken by the consumer to safeguard the vehicle.

The Consumer Commission acknowledged that the validity of the insurance policy was not disputed, and the insurance company's sole contention was the claimant's alleged negligence in safeguarding the vehicle. The Commission underscored that this was not a typical case of vehicle theft but rather a case of vehicle looting following the administration of an intoxicating substance to the driver.

The Commission further determined that the three-day delay in filing the police report was justified considering the extraordinary circumstances surrounding the incident. They concluded that the insurance company's decision to reject the claimant's claim was unreasonable and amounted to a deficiency in service.

The Commission referred to a Supreme Court judgment, Gurshinder Singh vs. Shriram General Insurance Co. Ltd. & Anr. The Apex Court in this particular case had stated that delay in providing information to the Insurance Company cannot be “fatal” in seeking a claim.

Ultimately, the Commission directed the insurance company (Magma HDI) to pay the consumer the Insured Declared Value (IDV) of the vehicle, which was ₹99,970, with an interest rate of 6 per cent per year. Additionally, they directed the insurance company to compensate the consumer with ₹20,000 for the mental distress and harassment he endured and to cover ₹10,000 in litigation costs. The insurance company was given 30 days to comply with these orders, and if they failed to do so, they would be liable for interest at the rate of 9 per cent per annum.

In its ruling, the Commission ordered Magma HDI to pay the consumer the Insured Declared Value (IDV) of the vehicle, amounting to ₹99,970, along with an interest rate of 6 per cent per annum. Additionally, the Commission directed the insurance company to compensate the consumer with ₹20,000 for the mental distress and harassment he experienced, and to cover ₹10,000 in litigation costs. Magma HDI was granted 30 days to comply with these orders, and failure to do so would result in interest charges at the rate of 9 per cent per annum.