Insurance claims independent of human errors, say industry players

The death of former Tata group chairman Cyrus Mistry in a road accident has ignited a debate over the eligibility of insurance claims in accident cases but industry players say the very purpose of buying insurance is to hedge against risk, whether due to human error or otherwise.

Human error or violation of rules is unlikely to vitiate an insurance policy and accidental death claims will continue to be honoured albeit in exceptional cases the compensation amount may be lowered.

Insurance documents per se do not list out acts, such as not wearing a seat belt, that could impact payment of compensation in case of death of occupants other than the driver, they said.

However, most policies mention "any accidental loss or damage suffered whilst the insured or any person driving the vehicle with the knowledge and consent of the insured is under the influence of intoxicating liquor or drugs", the compensation amount may be limited and would vary from car make and the kind of policy taken.

It is to be noted that the former Tata Sons Chairman and a friend of his died in a tragic road accident on Sunday afternoon while driving back to Mumbai from Ahmedabad along with two other persons, who have sustained injuries.

As per the preliminary investigations by the state police, the deceased were not wearing seat belts and termed over-speeding and an "error of judgement" by the driver to have led to the accident.

"Majority of the accidents happen because of human negligence. We are here because such human errors happen, if such human errors didn't happen, then very less number of accidents will happen. One buys a policy which actually covers his/her negligence.

"But our emphasis is always on safety. We keep on educating the customers about their safety and sensitise them through sustained campaigns because an insurance cover can only compensate for the financial loss but not for the loss of human life," Sanjay Datta, Chief - Underwriting & Claims, ICICI Lombard General Insurance Company, said.

Insurance companies cover the claims arising out of human error or negligence, for example, one may even sustain an injury while cooking at home or there may be a fire incident or something like that, he added.

"If the insured has a comprehensive motor insurance policy, the damages to the vehicle will be payable as per policy terms and conditions. In addition, the risk of occupants in the car is also covered under the said policy. Moreover, I would strongly urge anyone travelling in a vehicle to wear a seat belt at all times," Bajaj Allianz General Insurance MD Tapan Singhel said.

Rash driving is an offence under Section 279 of the Motor Vehicles Act, while it is advisable that motorists follow safe driving practices at all times, said a Chief Technical Officer of another private sector insurer, requesting not to be named.

"In case of an unfortunate accident arising out of rash or negligent driving, the insurance company is legally bound to honour the claim for damages to the vehicle, in line with the terms and conditions specified in the motor insurance policy," the official cited above said.

For a rear passenger wearing a seat belt or not, makes no case for denial of the claim, said an official from another general insurance firm.

It is a mandatory road safety rule in India for the back seat passengers to wear their seat belts.

Third-party insurance is compulsory for all vehicles, while own damage is optional presently.

Usually, vehicle owners buy a comprehensive insurance policy (own damage and third party together) every year as the term of such policies are usually one year.

The owner and insurance company issuing the policy are the first party and the second party, respectively, as per the insurance contract. The third party is the term used for a person other than the vehicle owner.

Datta and one of the persons cited above said that as insurers they can't monitor if a driver is overspeeding, if wearing the seat belt or not, or if the person lacked sleep and things like that.

According to Prudent Insurance Brokers joint managing director Pavanjit Singh Dhingra, "Whether a person is wearing a seat belt or not is not a subject matter of insurance contract".

So, a passenger killed or injured in a car crash would be entitled to the third party claim, he added.

Upon analysing the top causes listed by several insurers on their websites for the rejection of a claim include drunken driving, driving without a license, non-disclosure of information/hiding the truth, fraudulent claims, delay in intimation, policy lapse, car modification without informing the insurer, among others.

However, negligence such as driving a car in a flooded area despite the manufacturer's manual stating the car will break down if driven in such condition, an insurer has a full right to reject the claim.

Even violation of conditions, such as driving a personal car for commercial purposes, can also lead to the rejection of the claim.