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Why Your Insurance Claim Can't Be Rejected That Easily Now

You invest a good amount of your hard-earned money into buying your favourite set of four wheelers – be it a luxury car or the trucks & tractors meant for your business- and you feel a sense of pride every time you see your precious possessions. You also follow each and every procedure related to the documentation while insuring your vehicle (to protect it against any future damage).

However, you can never be sure whether your insurance claim is going to be accepted or rejected by your insurance company. Convincing and claiming your insurance successfully isn’t an easy task at all.

As per an old set of rules defined by insurers, claims were meant to be intimated immediately in case any sort of accidental damage or loss occurred to one’s vehicle. And, in case there was any delay caused in intimation it could lead to rejection of the claim as in the meantime the general insurance company could lose an opportunity to confirm facts and figures, which are especially critical in the cases of loss and damage (as in the scenarios of theft or fire accidents).

However, the latest iudgement released by the Supreme Court has brought a wave of relief amongst policy holders. The case was filed by a Hisar-based truck driver, Om Prakash, when he was denied an insurance claim for the theft of his truck from his insurer on the grounds that he was 1 week late in filing the claim. The Supreme Court ruled in the favour of the consumer and stated that the insurance claims cannot be rejected on the basis of delay caused in filing the claim if it has a satisfactory reason associated with it, as it will cause “the loss of confidence of policy-holder in insurance industry”.

The bench of Justices S Abdul Nazeer and R K Agrawal said that rejecting a claim on the basis that there has been a delay caused in filing the claim isn’t a reasonable condition at all (from the consumer’s perspective). If the reason for the delay has been justly explained and the claim has been found fair and genuine after the investigation performed by the investigator, there is no cause to reject the claim. They also stated that the aim of Consumer Protection Act is to protect the interest of consumers rather than harassing them. The bench also directed the insurance company (Reliance General Insurance Company) in this particular court case to pay a sum of Rs. 8.35 lakhs to the consumer.

The court added in its statement that although, it’s understandable that the owner needs to intimate the insurer on an immediate basis for any sort of damage caused to her/his vehicle, it’s very natural that s/he will firstly try to trace the vehicle on her/his own. Hence, such particular conditions shouldn’t hamper the settlement of genuine claims if the delay caused is due to real and unavoidable circumstances. The bench of justices further mentioned that the new rule is for the benefit of consumers and shouldn’t be misused at all.

In the appeal filed by Om Prakash, the consumer, it stated that his truck was stolen on March 23rd 2010, from Bhiwari (Rajasthan); however, as he was busy trying to trace his vehicle, he was not able to file the claim till the next week i.e. on March 31st, 2010. Following his claim, an investigation was held and the responsible corporate claim manager had approved a claim amount of Rs. 7.85 lakhs. However, later he was denied the claim amount based on the grounds that he had violated one of the company’s conditions where it mentioned that it is mandatory for the policyholder to inform the firm on an immediate basis in case of any accidental damage or loss to her/his vehicle.

Conclusion:

The latest statement released will ensure that insurance companies don’t have the complete authority when it comes to writing the rule book and the customers’ interests are taken care of, too. The Supreme Court has rightly observed that rejecting claims purely on technical grounds such as late intimation by the consumer will make her/him lose confidence in insurance sector.

Written By: PolicyBazaar - Updated: 29 July 2020

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