Baljeet Singh's Bolero jeep was insured with United India Insurance for Rs 4.70 lakh from January 20, 2010 to January 19, 2011. It was stolen on June 27, 2010, while parked near Noida. A First Information Report (FIR) was lodged with the police the same day and the insurance company was intimated.
The claim was repudiated by the insurance company on three counts. First, that the vehicle was parked in the street 'without any safety'. Second, that the intimation of theft was given to the insurance company after a gap of three months. Finally, that the vehicle was being hired out for commercial purposes, even though it was insured as a private vehicle. Singh challenged the rejection of his claim by filing a complaint before the Hisar District Forum.
After considering the rival contentions, the forum held that there was deficiency in service as the claim had been wrongly rejected. It relied on the judgment of the Supreme Court in Amalendu Sahoo v/s Oriental Insurance, where it had been observed that in the event of a private vehicle being used for a commercial purpose, the claim was considered non-standard and settled at 75 per cent of the insured value. Accordingly, the forum directed the insurance company to pay Rs 3.52 lakh along with nine per cent interest from the date the complaint was filed.
The company went in appeal to the Haryana State Commission, which concluded the claim was not payable as Singh had violated the policy terms and conditions by letting out the vehicle for hire.
Singh approached the National Commission for a revision. He pointed out that there was no nexus between the cause of the loss and the breach of the policy terms. Since the use of the vehicle for hire had not resulted in its theft, Singh argued his claim ought to be settled. On the other hand, the insurance company argued the FIR revealed the theft occurred while the vehicle had been hired out for a commercial purpose and the complaint was lodged after three months.
The National Commission observed the records showed the FIR was immediately registered but there was a typographical error in the date. The Commission refused to allow the insurance company to capitalise on a typing mistake to repudiate the claim.
The Commission noted the only issue was whether the claim was payable despite there being a violation of the policy conditions. The law on this subject had been settled by the Supreme Court in National Insurance v/s Nitin Khandelwal, where the court had taken a view that the breach of the policy condition regarding the hire of the vehicle for a commercial purpose has no bearing on the its theft and, hence, would be irrelevant. Nevertheless, the entire amount would not be payable and it would have to be settled at 75 per cent of the insured value by treating it as a non-standard claim.
Accordingly, the National Commission held the outright rejection of the claim was unjustified. It set aside the order of the State Commission and restored the order of the District Forum holding the insurance company liable to pay Rs 3.52 lakh, along with interest.
The conclusion is that a claim cannot be rejected for breach of a policy condition unless such breach is the cause of the loss. When there is no nexus between the breach and the loss, the claim has to be settled on a non-standard basis.
The writer is a consumer activist
