Chandigarh District Commission Holds United India Insurance Co. Liable For Repudiation Based On Terms Not Adequately Informed To Insured

Brief Facts:

Captain Kanwaljit Singh (“Complainant”) purchased a car in December 2015 with a valid registration until 25.02.2031 which was insured with the United India Insurance Company Limited (“Insurance Company”). The insurance agent is the Complainant of full claim entitlement in the event of any accidents. Unfortunately, the insured car was involved in an accident in November 2020. Following the company's advice, the Complainant sent the car for repairs to Joshi Hundai, Mohali. Upon completion, a final bill of Rs.57,229/- was issued, of which the Complainant was required to pay Rs.23,671/-, with the remainder of the claim rejected by the regional manager of the insurance company. The rejection of the claim was based on the absence of premium payment for the 'NIL Depreciation' add-on cover, a fact not adequately communicated to the Complainant by the insurance company. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-II, Chandigarh and filed a consumer complaint against the insurance company.

In response, the insurance company stated that it paid the claim and was duly received by the Complainant as per the terms and conditions of the insurance policy. It clarified that the Complainant's car was insured against the premium paid, without an additional premium for NIL Depreciation, as evident from the insurance policy. The insurance company raised the possibility that had the Complainant paid an additional premium for NIL Depreciation, the surveyor might have assessed the loss accordingly. It argued that the payment made aligned with the entitlement under the policy as per the Complainant's choices.

Observations by the District Commission:

The District Commission noted that the agent of the insurance company sold the insurance policy with a guarantee of full claim payment in the event of an accident. It is further observed that the agent of the insurance company sold the insurance policy to the Complainant, assuring full claim entitlement in case of an accident. Notably, it held that there was no record indicating that the terms and conditions of the policy were ever supplied or explained to the Complainant. It held that the Consumer Protection Act, of 2019, grants consumers the crucial right to be informed. In this case, it held that Complainant was not adequately informed about the policy's terms and conditions; instead, the agent of the insurance company conveyed an understanding that the Complainant would be entitled to a full insurance claim in the event of an accident. Therefore, it held the insurance company liable for deficiency in services.

Consequently, the District Commission directed the insurance company to pay the remaining amount of Rs. 23,671/- to the Complainant. Additionally, interest at the rate of 9% per annum was ordered to be paid from the date of filing the complaint until the actual realization of the amount.