2017 (10) TMI 1663 - SC - Indian Laws

Insurance claim cannot be rejected solely for delay if satisfactorily explained by policyholder

Om Prakash Versus Reliance General Insurance and Ors.

The SC allowed an appeal regarding rejection of an insurance claim due to delay in reporting theft. The Court held that insurance claims cannot be ... Rejection of insurance claim - Delay in informing insurance company about theft - HELD THAT:- If the reason for delay in making a claim is satisfactorily explained, such a claim cannot be rejected on the ground of delay. It is also necessary to state here that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator. The condition regarding the delay shall not be a shelter to repudiate the insurance claims which have been otherwise proved to be genuine. It needs no emphasis that the Consumer Protection Act aims at providing better protection of the interest of consumers. It is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering the claims made under the Act. In the instant case, the Appellant has given cogent reasons for the delay of 8 days in informing the Respondent about the incident. The Investigator had verified the theft to be genuine and the payment of Rs. 7,85,000/- towards the claim was approved by the Corporate Claims Manager, which, in our opinion, is just and proper. The National Commission, therefore, is not justified in rejecting the claim of the Appellant without considering the explanation for the delay. Also, the claimant is entitled for a sum of Rs. 50,000/- towards compensation. The orders of the National Commission, State Commission and the District Forum are set aside and the claim petition filed by the Appellant is allowed - Appeal allowed. Issues:Delay in informing insurance company about theft, rejection of insurance claim, validity of reasons for delay, interpretation of insurance policy conditions, consumer protection under the Consumer Protection Act.Analysis:The judgment involves a case where the Appellant's truck was stolen, and he filed an insurance claim with the insurance company, which was later repudiated due to a delay in informing about the theft. The Appellant visited the place of theft, met police officials, and actively participated in the search for the stolen vehicle before lodging the insurance claim. The insurance company rejected the claim citing breach of Condition No. 1 of the insurance policy, which required immediate information about the loss/theft of the vehicle.The Appellant filed a complaint before the District Consumer Disputes Redressal Forum, which dismissed the complaint stating no deficiency of service by the insurance company. The Appellant then appealed to the State Consumer Dispute Redressal Commission and subsequently to the National Consumer Disputes Redressal Commission, both of which upheld the dismissal of the claim. The Appellant challenged these orders, arguing that the reasons for the delay in filing the claim were valid and that the Investigator appointed by the insurance company verified the theft.The Court considered the circumstances of the case, emphasizing that rejection of claims on purely technical grounds could erode policy-holders' confidence in the insurance industry. The Court noted that the Consumer Protection Act aims to protect consumers' interests and should be construed liberally. The Court highlighted that genuine claims should not be rejected based solely on delays if valid reasons are provided, especially when the claim has been verified as genuine.Ultimately, the Court allowed the appeal, setting aside the orders of the lower forums and directing the insurance company to pay the Appellant the claim amount along with compensation. The Court found the delay in informing the insurance company justified, given the circumstances, and approved the claim amount recommended by the Investigator and Corporate Claims Manager. The insurance company was directed to pay the Appellant within a specified timeframe, emphasizing consumer protection under the law.