NCDRC holds ICICI General Insurance responsible for service failure following denial of insurance claim

Brief facts of the case

The complainant owned a Tata Sumo and had taken an insurance policy with insurer/general insurance ICICI Lombard for one year. The vehicle was then stolen and the complainant reported the theft to the police the next day, before making a formal complaint a week later. He also informed the insurer of the theft shortly afterwards. The insurer, however, rejected the claim, citing a violation of condition no. 1 of the policy due to an 8-day delay in notifying the police and 16 days in informing the insurer. In response, the complainant filed a consumer complaint with the District Forum, which upheld the complaint. He ordered the insurer to pay the insured amount of Rs.4,40,000 out of Rs.5,000 for mental, physical and mental agony along with Rs.2000 towards legal expenses. Aggrieved, the insurer appealed to the Uttar Pradesh State Commission, which allowed the appeal and set aside the order of the District Forum. Consequently, the complainant sent a request for review to the National Commission.

Insurer disputes

The insurer denied all allegations in the complaint. While confirming the vehicle was insured, they said the policy had special conditions. The insurer argued that the plaintiff failed to immediately report or warn the police about the theft, saying the denial of the insurance claim was not based solely on the delay in filing the FIR, but was due to violations of essential conditions of the police. They argued that these delays prevented both parties from effectively searching for the vehicle. As a result, the insurer asserted that there was no deficiency in service and requested that the complaint be dismissed.

Observations of the National Commission

The National Commission observed that the key question was whether the insurer’s rejection of the claim due to late reporting was in accordance with the terms of the policy. The insurer rejected the claim based on alleged suppression of facts and violation of policy conditions, noting that the plaintiff reported the theft to the insurer with a 16-day deadline and filed the FIR with a deadline of 8 days. The honorable Supreme Court of Surendra Kumar Bhilawe v. The New India Assurance Co. Ltd. stated that the insurer could not escape liability based on transfer of ownership if the insured remained the owner of the vehicle at the time of the accident. In Jaina Construction Committee v. Oriental Insurance Co. Ltd., the Court held that although the plaintiff had delayed by five months in informing the insurer, the insurer had not disputed the authenticity of the claim but had simply cited the delay as grounds for repudiation. The Court in Dharmender v. United India Insurance Co. Ltd. also indicated that claims should not be denied solely due to reporting delays, provided the theft was reported to law enforcement. Furthermore, in Gurshinder Singh v. Shriram General Insurance Co. Ltd.the Court emphasized that cooperation must be assessed according to whether the actions of the insured caused harm to the insurer. She said simply delaying informing the insurer after reporting to the police does not constitute a breach of duty.

In light of these decisions, the Commission concluded that minor delays in notifying the insurer should not constitute grounds for denial of a claim, affirmed the District Forum’s decision, and vacated the Commission’s order of state.

Case title: Pradeep Kumar Yadav Vs. ICICI Lombard General Insurance Company Ltd.

File number: RP No. 1662/2022

Click here to read/download the order