Insurance company fined for rejecting claims

501006-consumer-affairsThe consumer forum recently pulled up Cholamandalam M S General insurance for wrongly repudiating one of its consumer’s claim.

It said, that the act of rejecting the insurance claim was against the basic principle and the concept of insurance.

The company was levied with a hefty fine worth Rs.6,42,148, along with an additional amount of Rs10000 and Rs5000 towards the complainant’s mental agony and litigation charges.

The case dates back to September 13, 2011, when K P Laxmi travels, an Andheri based travel firm, had complained about its vehicle theft to the insurance firm.

The vehicle had left with passengers to Jalgaon. However, in the middle of the journey the driver was duped by the passengers who fled with the car.

The driver immediately informed the travel firm, who registered a police complaint and informed the insurance company’s agent.

The travel agency eventually approached the consumer forum seeking the compensation as the insurance company refused their claim on the grounds of a breach of condition, stating it cannot be honoured.

The forum, after going through the evidences brought on record by the complainant company, asked the insurance firm to file its reply.

The insurance firm in its reply claimed, It is an admitted fact that there was a theft of vehicle and that the plaintiff had paid the premium.

However, there was a breach of policy clause, which insists the insurer to take reasonable steps to safeguard the vehicle from the loss and thus the claim was rejected.

The second reason being that there was no prompt intimation of the same to the policy.

The complainant responded saying they had immediately informed the insurance agent, however the delay was caused by the agent.

The forum said, It is an admitted fact by the insurance company that the complainant had paid premium as consideration to the insurance company, it is also admitted that the theft of vehicle had also taken place.

Further it was contended by the complainant that the policy was perched through the agent and that the complainant had reported about the theft to the agent on the same day but the agent did not respond to the same.

Further, records revealed that the FIR was lodged at Shirpur police station on the same day of theft, and the claim was submitted within 10 days. Thus the reasons given by the company to repudiate the claim, are nullified.

The passengers inside the vehicle were strangers and it was not expected by the driver that they would flee.

Therefore the forum is of the view that the incident of theft is an unexpected event. Even though the driver left the car to urinate, the unexpected event of theft happened.

Therefore the complainant has suffered a heavy financial loss which can be regarded as contingency and in such event the policy holder is expected to be indemnified by the insurance company, maintained the forum.

Curated fromĀ Insurance company fined for rejecting claims

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