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Theft - Delay in informing insurer

In Om Prakash v. Reliance General Insurance, the said vehicle was stolen on 23.03.2010 at about 9:00 p.m. Consequently, an FIR was lodged, on 24.03.2010. Thereafter, the appellant visited the office of the first respondent but the office was found to be closed. On 29.03.2010, the appellant along with the truck driver, went with the police officials for their assistance to search the vehicle. The appellant reached his village on 30.03.2010. On 31.10.2010, the appellant lodged the insurance claim with the respondent-company at Hissar and provided the necessary documents which were demanded by the respondent-company. However, the respondent-company repudiated the insurance claim of the appellant citing breach of Condition No. 1, i.e. immediate information about the loss/theft of the vehicle.

The Supreme Court allowed  the appeal and the claim petition filed by the appellant and set aside the orders of the National Commission, State Commission and the District Forum.

The court held that the appellant, owner of the truck in question, is the resident of Muzadnagar village, Tehsil Hansi, District Hissar, State of Haryana. The theft of the vehicle had taken place on 23.03.2010 at Chopanki, Bhiwari, Rajasthan. The FIR was lodged in P.S. 6 Tapukra, District Alwar on 24.03.2010 and the claim petition was filed on 31.03.2010. Dinesh, the truck-driver, had filed an affidavit before the District Forum stating that the owner of the truck had reached the place of occurrence of theft and met him and also the concerned police official.

The Police had asked him and the owner to stay with them in order to help them for tracing out the truck. The police had also asked them to collect necessary documents in relation to the said truck. They were, consequently, busy with the Rajasthan Police in searching the vehicle. They visited many places in Rajasthan. The police had compelled the appellant to accompany them while searching the truck. It is only on 29.03.2010, the appellant went back and reached his village on 30.03.2010. The appellant had also filed a similar affidavit before the State Commission explaining the reasons for the delay in informing theft of the vehicle.

Condition No.1 of the Insurance Policy states that notice shall be given in writing to the company immediately upon the occurrence of any accidental loss or damage in the event of any claim and thereafter the insured has to give all such information and assistance as the company may require.

It is common knowledge that a person who lost his vehicle may not straightaway go to the Insurance Company to claim compensation. At first, he will make efforts to trace the vehicle. It is true that the owner has to intimate the insurer immediately after the theft of the vehicle. However, this condition should not bar settlement of genuine claims particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.

The decision of the insurer to reject the claim has to be based on valid grounds. Rejection of the claims on purely technical grounds in a mechanical manner will result in loss of confidence of policy-holders in the insurance industry. If the reason for delay in making a claim is satisfactorily explained, such a claim cannot be rejected on the ground of delay.

It is also necessary to state here that it would not be fair and reasonable to reject genuine claims which had already been verified and found to be correct by the Investigator. The condition regarding the delay shall not be a shelter to repudiate the insurance claims 8 which have been otherwise proved to be genuine. It needs no emphasis that the Consumer Protection Act aims at providing better protection of the interest of consumers. It is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering the claims made under the Act.

In the instant case, the appellant has given cogent reasons for the delay of 8 days in informing the respondent about the incident. The Investigator had verified the theft to be genuine and the payment of Rs.7,85,000/- towards the claim was approved by the Corporate Claims Manager, which, in our opinion, is just and proper. The National Commission, therefore, is not justified in rejecting the claim of the appellant without considering the explanation for the delay. We are also of the view that the claimant is entitled for a sum of Rs.50,000/- towards compensation.

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