Compensation for default in insurance claims in consumer protection Act

 

Compensation for default in insurance claims in consumer protection Act

Life Insurance Corporation of India v. Gurvinder Kaur W/o Late

Kawaljeet Singh 207 AIR 2009 SC 1000.

208 2013 SCC OnLine NCDRC 561.   

 

 

Facts: Complainant filed a complaint before District Forum against Petitioner

(Insurance Co.) alleging deficiency in service. Complainant submitted that

X (Complainant’s husband) obtained policy of Rs. 1,00,000/- from Petitioner.

X fell ill and some problem was detected in right kidney and he underwent

treatment for the same, but later expired. Complainant submitted claim, which was repudiated by the Petitioner on flimsy grounds. Petitioner contended that policy issued in favour of deceased lapseddue to non-payment of half yearly premium due on 14- 6-2003 and it was again revived on 1-11-2003. Further contended that at the time of revival, diseased submitted personalstatement of his health, which contained false statement in respect of his health. District Forum allowed said complaint and directed Petitioner to pay policy amount along with 9% p.a. interest and Rs. 5,000/- as compensation and Rs. 2,000/- as cost of litigation. Appeal filed by the Petitioner was dismissed by State Commission. Hence, instant revision petition.

Issue: Whether order of the District Forum as affirmed by the State

Commission could be upheld?

Decision: The question before National Commission was that whether order

of the District Forum as affirmed by the State Commission could be upheld.

It was held that deceased had suppressed material facts regarding his previous treatment and operation and has furnished false answers regarding his health, operation, X-ray, etc. Petitioner had not committed any deficiency in repudiating claim and District Forum committed error in allowing complaint

and State Commission further committed error in dismissing appeal – Revision allowed.

 

Compensation for accidental death

Chhattisgarh State Power Holding Company Ltd. v. Bajaj Allianz

General Insurance Company Ltd. 209 II (2014) CPJ 112 (NC).

 

Facts: While upholding the order of a consumer forum directing an Insurance Company to pay compensation to the family of a deceased person who suffered a cardiac arrest during a fall from an electric pole of a construction site, NCDRC quashed the order of Chhattisgarh State Consumer DisputesRedressal Commission vide which the order of Forum was dismissed and allowed the revision against the same. The Court was hearing a revision petition filed by Petitioner, which obtained a Group Personal Accident Insurance Policy for the benefit of its employees from the Insurance Company, under which a sum of Rs. 4 lakhs was payable in case of accidental death of any employee of the Petitioner/Complainant. The deceased employee, who was doing some construction work on an electric pole he fell down from the said pole, after which he was declared dead by the medical authorities. The Petitioner company paid a sum of Rs. 4 lakhs to the legal representatives of the deceased and claimed that amount from the insurance company but its claim was repudiated on the ground that according to the post-mortem report, deceased died due to heart failure, as he had been suffering from diabetes and heart disease. In complaint, Consumer Forum directed the Insurance Company to pay the compensation but State Consumer Commission dismissed the said order.

Issue: Whether the deceased died due to heart failure or was it due to an

accident?

Decision: The commission held that this is a case where death has occurred because of an accident, involving fall from an electric pole 36’ in height and under the terms and conditions of the Insurance Policy, the Respondent is liable to pay compensation to the legal heirs of the deceased employee. Since in this case, the amount of ‘ 4 lakh has already been paid to the legal heirs of the deceased employee, the OP has to pay the said amount to the petitioner/complainant and also a compensation of Rs. 5,000/- for mental agony and Rs. 1,000/- as litigation cost as ordered by the District Forum.

 

Compensation for loss caused by fire

 

New India Assurance Company v. Penta Care Ayurpharma210 2013 SCC OnLine NCDRC 563.

 

Facts: Complainant filed a complaint before District Forum against Petitioner

(Insurance Co.) alleging deficiency in service. Complainant submitted that

he was carrying on the activity of manufacturing ayurvedic medicines, had

obtained an insurance policy from the Petitioner, known as the ‘Fire and

Special Peril Policy’. There was a fire on the premises of the Complainant

and bulk of furnished products and extracts stored in the store room were

completely burnt, resulting in loss to the tune of Rs. 2,55,335/-. Complainant

informed the Petitioner about the incident. Petitioner maintained that the

cause of the loss was a peril which was excluded under the terms and

conditions of the insurance policy, and hence they were not liable to pay the

claim - District Forum allowed said complaint and directed the Petitioner to

pay a sum of Rs. 2,55,335/- to the Complainant with interest at the rate of

12% p.a. from the date of repudiation, until actual payment. An appeal filed

before the State Commission against this order was dismissed by the State

Commission- Hence, instant revision petition.

Issue: Whether the insurance policy was issued for the purpose of

indemnifying the insured in case of fire and special peril?

Decision: It was held that insurance Policy in question, was issued for the

purpose of indemnifying the insured in case of fire and special peril. Hence,

when the goods of the Complainant were burnt due to excess heat generated during pulverisation, it can be held as an accidental loss by fire. Hence, prima facie, such loss was covered under the policy which was issued for covering fire risk. No reason to disagree with the findings of the State Commission and the District Forum because it was an established fact that loss has been caused to the Complainant due to the burning of stocks in the go down.

Revision dismissed.

 

Compensation for theft of vehicle

 

National Insurance Company Ltd. v. N.K. Financers and Jai Singh,1

Facts: The revisions petition has been preferred by the National Insurance

Company Ltd. and the Complainant, under Section 21 of the Consumer

Protection Act, 1986 assailing the common order by the State Consumer

Redressal Commission, UP at Lucknow in Appeals. The impugned order the

State Commission, modifying the order passed by the District Consumer

Disputes Redressal Forum, Bulandshahar, has directed the Insurance Company to pay to the Complainant and amount of Rs. 3,90,675/- with interest @ 9% p.a. from 30.06.2003 i.e. after the expiry of three months from the date of surveyor’s report. It has also been directed that if the said amount is not paid within the specified period, interest @ 15% p.a. shall be payable. The Complainant, a financier, advanced loan of Rs. 5,00,000/- to one Jai Singh for purchase of Ashok Leyland truck on hire-purchase basis. The truck was registered. The Complainant insured the truck with the insurance company declaring its value at Rs. 6,00,000/- it was a comprehensive policy covering the period from 9.3.2000 to 8.3.2001, a premium if Rs. 10,759/- was paid, on the intervening 3rd and 4th July 2000 night the vehicle was stolen, The police was informed. Information regarding theft was also given to the insurance company on 6.7.2000. Finally untraceable report in respect of the vehicle, filed by the police, was accepted by the Magistrate. The Complainant lodged its claim for compensation with the Insurance Company offered to pay to the Complainant a sum of Rs. 2,85,000/- though the loss assessed by the surveyor on the basis of the market value of the vehicle at the time of

theft was Rs. 4,88,344/-. The said amount seems to have been accepted by

the Complainant. Being dissatisfied with the amount of compensation

received, seemingly under pressure, the Complainant filed a complaint before

the District Forum under section 12 of the Act praying for compensation of

Rs. 6,00,000/- with interest @ 12% p.a. The insurance company as well as

the Complainant preferred appeals against the said order before the State

commission. The complaint’s grievance was that the interest had been

awarded for a shorter period, the insurance company contested the quantum

of compensation. Both the appeals, the State Commission has modified the

order of the District Forum. The issues were basis for determination of the

market value of the vehicle for assessment of loss and the period and rate of

interest, payable on amount of compensation. The Commission held that it

is no more res integra, in Dharmendra Goel v. Orinetal Insurance Company Ltd. (2008) 8 SCC 279, the Supreme Court has held that an insurance company,after having accepted the value of a particular vehicle at the time of issuing the insurance policy, could not disown that very value on pretext or the other when they are called upon to pay compensation. The Commission also held that the said authoritative pronouncement, the loss on account of theft of the vehicle declared at the time of renewing the policy and not the market value of the vehicle at the time of the theft. The rate of  interest @15% directed to paid only in the event of Insurance Company not disbursing the amount of compensation awarded by the State Commission, The Commission also feel that it would be fair in the insurance company is directed to pay simple interest @ 9% p.a. on the balance amount of compensation to be computed in terms of this order minus the amount of Rs. 2,85,000/- already paid from the date of payment of Rs. 2,85,000/- to the Complainant till the date of actual payment.

Decision: The Commission held that the revision petition was allowed the

order was set aside and the insurance company was directed to re-assess the loss on the vehicle, adopting the base value at Rs. 6,00,000/- insisted of

Rs. 4,88,344/-.Compensation for vehicle insurance.