Rejection by an insurer of an insurance claim made by the insured/claimant (“consumer” or “complainant”) against damages to vehicle involved in an accident and covered by a valid insurance policy may be legally unsustainable under the Consumer Protection Act 2019 (CPA), where the insurer raises the following objections to defend the consumer action under CPA, applying the principles of a recent decision of the Hon’ble Supreme Court.
Accident location and jurisdiction of District Commission
Section 34 of CPA allows a complaint to be instituted by the consumer before a District Commission (where value of goods or services paid for does not exceed ₹1 Crore) within the local limits of whose jurisdiction the insurer ordinarily carries on business or has a branch office at the time of such institution, or the cause of action (wholly or in part) arises, in addition to where the consumer resides or personally works for gain. Therefore, merely because the accident in question happens in a place far from the District Commission, the insurer cannot avoid the action by questioning the territorial jurisdiction of the District Commission on this ground.
Financed vehicle and (non-registered) “user”
Action under CPA against the insurer can also be pursued by the consumer even where the vehicle in question is directly financed by a third party (eg. employer), which may also be the registered owner of the vehicle, but the vehicle was purchased for the benefit of the consumer, who uses (for non-commercial reasons) and/or pays indirectly for the vehicle via EMIs against salary etc. as per the broad definition of a “consumer” under Section 2(7) of CPA.
Delayed intimation of accident
Alleged breach of a insurance policy condition obliging the insured consumer to promptly report or intimate the accident to the insurer too cannot be ground for rejecting the claim where it is established that the consumer had reasonable excuse for the delay and intimated immediately thereafter, in addition to following other protocol (eg. securing and moving vehicle to designated dealer/workshop, lodging police report, cooperating with insurer’s surveyor etc.) to demonstrate bona fides.
In this regards, reference may also be made to Insurance Regulatory and Development Authority of India (IRDAI) Circular dated 20.09.2011, which advises that the condition of reporting the accident occurrence within a specified time should not prevent the settlement of genuine claims, particularly where delay in intimation or submission of documents is due to unavoidable circumstances.
Discrepancies in Accident Reports
Discrepancies in the accident report and police statement would be irrelevant and not a ground for claim rejection if it is undisputed that the accident occurred and no fault (eg. rash and negligent driving) on the part of the consumer was claimed by the insurer, which may otherwise have resulted in invoking of any of the general or specific exceptions in the policy of insurance in favour of the insurer.
Legal information by Legalrisk – law, risk and AI
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