Delay in Registering Complaint Leads to Denial of Motor Insurance Claim

Case Summary

A case was brought to the notice of the district consumer redressal forum in India by Ramesh Kale, a private tourist operator, regarding the rejection of a car insurance claim by an insurance provider. The grounds for rejection according to the insurance company is the delay in reporting the theft of the insured vehicle to the company as well as to the police and filing an FIR. The argument given by the insurance company was considered valid by the redressal forum and the policy holder’s claim was rejected on the premise of delay in plaint.

Key Findings

  • The vehicle stolen was a Mahindra Scorpio.
  • The stolen vehicle was used for commercial purposes.
  • The insurance claim amount was worth Rs. 6.5 lakhs.
  • The policy holder had regularly paid an insurance premium of Rs. 26,000 till the date of loss of the vehicle.
  • A complaint was registered with the police only 12 days after the incident.
  • The district consumer redressal forum has jurisdiction over the insurance claim complaints related to commercial vehicles.

Core Problem

  • Major Issue - Delay in reporting the theft of the insured vehicle to the police and filing an FIR, and reporting the same to the insurance provider. This lead to the denial of the car insurance claim .
  • Other Issues (circumstantial)- If vehicle is insured claiming it is for personal use, but is used for commercial purposes, insurance claim will be denied.

Solution/ Alternative Course of Action

As per the terms and conditions of all insurance providers, any loss/ damage to the insured vehicle or item, should be reported to the company immediately. In the case of a , the theft, damage caused to the car after an accident, damage or loss to third-party and/or third-party property, etc. should be immediately reported to the police and an FIR should be filed. A copy of the FIR is to be submitted at the time of processing the insurance claim.

Since Mr. Ramesh Kale had not immediately reported the loss to the police or to the insurance provider, the insurance claim was rejected and an unfavourable verdict was given by the district consumer redressal forum.

Though not specified in this particular case, if the vehicle which was insured by Mr. Kale was stated to be for personal use at the time of insuring the same but was used for commercial purposes, this is also a ground for denial of insurance claim.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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