Insurance companies refusing claims on flimsy/technical grounds must stop! Don’t ask for documents that insured can’t produce: Supreme Court

Supreme Court: In a case where an Insurance Company had refused to settle an insurance claim on non-submission of the duplicate certified copy of certificate of registration of the stolen vehicle, the bench of MR Shah* and BV Nagarathna, JJ has held that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.

In the case at hand, a Truck was stolen and an FIR was registered on the very day of theft. The Insured also informed the Insurance Company about the theft on the same day and had also produced the photocopy of the certificate of registration and the registration particulars as provided by the RTO. However, the appellant could not produce either the original certificate of registration or the duplicate certified copy of certificate of registration of the Truck. When the appellant applied for the duplicate certified copy of the certificate of registration, the RTO denied to issue the duplicate certified copy on the ground that in view of information/report regarding theft of the vehicle, which has been registered with the RTO, the details regarding registration certificate on the computer has been locked. The Insurance Company, however, refused to settle the claim.

In such circumstances, the Supreme Court observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim.

The Court was of the opinion that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. It observed,

“The insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control.”

The Court, hence, directed the Insurance Company to pay Rs.12 lakhs insurance along with interest @7 per cent from the date of submitting the claim. The insurance company was also saddled with the liability to pay the litigation cost of Rs. 25,000/­ to the appellant.

[Gurmel Singh v. National Insurance Co. Ltd., 2022 SCC OnLine SC 666, decided on 20.05.2022]


*Judgment by: Justice MR Shah


Counsels

For Appellant: Advocate Anand Shankar Jha

For Insurance Company: Advocate Hetu Arora Sethi

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