Forcing Insured Person To Accept A Claim Less Than The Insured Value Amounts To Unfair Trade Practice: Chandigarh District Commission

The Chandigarh District Consumer Disputes Redressal Commission has held that forcing the complainant insured person to accept only Rs.16,50,000 as full and final settlement as against the insured value of Rs. 22,00,000 would constitute unfair trade practice by New India Assurance Co. ltd. The bench of Presiding member Padma Pandey and Member Preetinder Singh has observed that such acts including repudiation of genuine claim of the complainant are contrary to the principle of insurance which mandates insurance companies to act in good faith. Directions were passed to pay the full insured value of Rs. 22 lakhs. Rs. 1 lakh has been awarded as compensation for deficiency in service and unfair trade practice. Further costs amounting to Rs. 33,000 has been ordered to be paid as litigation expenses. Brief background: The Complainant took a vehicle insurance policy for an Insured Value of Rs. 22 lakhs. The vehicle met with an accident and got extensively damaged. Consequently, a claim was lodged immediately with the insurance company. The Complainant stated that despite submission of requisite documents and the case being of a total loss, the insurance company failed to clear the claim amount. It was further alleged by the complainant that he was compelled by the surveyor of the insurance company to accept a sum of Rs. 16,50,000 as the final settlement amount which was an unfair trade practice. Consequently, the genuine claim of the complainant was repudiated by the Company. The Insurance Company argued that no case is made out for deficiency in service and unfair trade practice. No affidavit was sought by the Company or the surveyor compelling the Complainant to accept a lesser amount of claim. Observations: The bench observed that the affidavit obtained by the Insurance Company which coerced the complainant to consent to Rs.16,50,000 as full and final payment as against the insured value of 22 lakhs is an unfair trade practice. There was a further condition that the complainant will not demand any other claim from the company. It was observed that such acts take away the fundamental and legal rights of the complainant. Dismissing the claim of the complainant on baseless grounds after making them wait for a long period of time shows the attitude of the insurance company to shy away from their obligations. The bench discussed the significance of insurance contracts observing that an insurance company has a fiduciary duty to act in good faith and honour their commitment especially when there is no negligence by the insured person. Thus, directions were passed to pay the Insured Value of Rs. 22 lakhs alongwith interest @9% p.a. An amount of Rs. 1 lakh was also directed to be paid as compensation for mental agony and physical harassment. Moreover, Rs. 33,000 were also awarded as litigation expenses. Case name: Renu Bala vs New India Assurance Co. ltd & Ors. Case number: CC/55/2024 Date of decision: 19.11.2024 Click Here To Read/Download The Order

Forcing Insured Person To Accept A Claim Less Than The Insured Value Amounts To Unfair Trade Practice: Chandigarh District Commission

Aakanksha Bajoria

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