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INSURER CAN’T DENY CLAIM ON GROUNDS OF DELAYED FILING, SAYS SUPREME COURT

THIS STORY IS FROM OCTOBER 8, 2017

Insurer can’t deny claim on grounds of delayed filing, says Supreme Court
Amit Anand Choudhary (https://timesofindia.indiatimes.com/toireporter/author-Amit-Anand-Choudhary-479239186.cms) | TNN | Updated: Oct 8, 2017,
(/articleshowprint/60989395.cms)
2:54 IST

HIGHLIGHTS

The apex court has ruled that insurance claims cannot be denied to a person merely on the grounds of delay in filing the claim.

The Court held that “mechanical” denials on technical bases will cause people to lose confidence in the industry.

NEW DELHI: The Supreme Court (https://timesofindia.indiatimes.com/topic/supreme-court-of-india) has ruled that insurance
(http://timesofindia.indiatimes.com/topic/insurance) claims cannot be denied to a person merely on the grounds of delay in
filing the claim, holding that “mechanical” denials on technical bases will cause people to lose confidence in the industry.

A bench of Justice R K Agrawal and Justice S Abdul Nazeer (https://timesofindia.indiatimes.com/topic/Abdul-Nazeer) set

aside the verdicts of various consumer courts, including the National Consumer Disputes Redressal Commission
(https://timesofindia.indiatimes.com/topic/National-Consumer-Disputes-Redressal-Commission) (NCDRC
(https://timesofindia.indiatimes.com/topic/NCDRC)), which had ruled that insurance companies could deny the benefit of
cover for delay in filing the claims.

The SC (https://timesofindia.indiatimes.com/topic/supreme-court-of-india) directed Reliance General Insurance Company

(https://timesofindia.indiatimes.com/topic/Reliance-General-Insurance-Company) to pay Rs 8.35 lakh to a Hisar-based
customer whose insured truck was stolen but his claim rejected on the grounds of delay in filing it.

“It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, this condition should
not bar settlement of genuine claims, particularly when the delay in intimation or submission of documents is due to
unavoidable circumstances. The decision of the insurer to reject the claim has to be based on valid grounds. Rejection of the
claims on purely technical grounds in a mechanical manner will result in loss of confidence of policyholders in the insurance
industry,” said Justice Nazeer, who wrote the judgment.

The verdict would bring big relief to people who fail to file insurance claims immediately after their vehicles are damaged in
accidents or stolen.

The court said a practical approach had to be taken in such cases as it was common knowledge that a person who loses their
vehicle might not straightaway go to the insurance company, and would first make efforts to trace it. “If the reason for delay...
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,” the bench said.

The court emphasised that the Consumer Protection Act was meant to protect the interest of consumers and the law
deserved “liberal construction”. “This laudable object should not be forgotten while considering the claims made under the
Act,” it said.

In the case in question, the vehicle-owner had filed the claim eight days after his truck was stolen as he was busy trying to
trace it. The insurance firm rejected his claim, saying he had violated a policy condition that made it mandatory for a policy-
holder to inform the firm immediately after any accidental loss or damage to the vehicle.