An insurance company should not request the following documents from the insured in the course of resolving claims: Supreme Court
Case Title: Gurmel Singh vs Branch Manager, National Insurance Co. Ltd. | 2022 LiveLaw (SC) 506 | CA 4071 OF 2022 | 20 May 2022
Summary
The Supreme Court has emphasized the importance of insurance companies avoiding excessive technicality and requesting documents that the insured cannot provide due to unforeseen circumstances. In a case involving a theft insurance claim, the insured filed a complaint with the District Consumer Disputes Redressal Commission, which was resolved by providing the insurance company with a duplicate certified copy of the truck’s certificate of registration within one month. However, the RTO declined to provide the document, citing a cybersecurity breach.
The claim remained unresolved, leading to a new consumer complaint. The District Commission dismissed the complaint, but the Supreme Court ruled that the claim could not be considered a deficiency in service. The court also noted that the insurance company settled the claim in an arbitrary and overly technical manner, denying the claim on technical and/or specious grounds. The court awarded the appellant Rs. 12 lakhs in insurance, interest at a 7% rate, and ordered the insurance company to reimburse the appellant for litigation expenses amounting to Rs. 25,000.
About the case
The Supreme Court noted that in the process of resolving claims, an insurance company should avoid excessive technicality and refrain from requesting documents that the insured is unable to provide due to unforeseen circumstances. In numerous instances, the bench of Justices MR Shah and BV Nagarathna observed that insurance companies deny claims on technical and/or dubious grounds. In this instance, when the insurance company failed to settle a theft insurance claim, the insured filed a complaint with the District Consumer Disputes Redressal Commission.
The commission resolved the complaint with the following order: the insured was required to provide the insurance company with a duplicate certified copy of the truck’s certificate of registration within one month. Upon receipt of the document, the insurance company was required to settle the claim in accordance with the terms and conditions of the insurance policy. He subsequently filed with the RTO a request to obtain a duplicate certified copy of the truck in question’s certificate of registration. Nevertheless, the RTO declined to provide a duplicate certified copy of the certificate of registration, citing the cybersecurity breach of the truck’s information on the computer as the reason for the denial. He subsequently submitted an application to the insurance provider along with an RTO-issued photocopy of the certificate of registration and registration information. In light of the aforementioned, the claim remained unresolved; consequently, he lodged a new consumer complaint.
The District Commission dismissed the aforementioned complaint on the grounds that the claimant failed to submit the necessary documents for claim settlement. As a result, the claim could not be considered a deficiency in service. Following its approval by the State Commission and the National Consumer Disputes Redressal Commission, the District Commission affirmed this order. The bench of the Apex Court noted in its appeal that the insurance claim remains unresolved primarily because the appellant failed to submit the duplicate certified copy of the certificate of registration issued by the RTO, in addition to the original certificate of registration.
The bench noted, however, that the appellant did submit photocopy 5 of the certificate of registration and other registration particulars furnished by the RTO. Regardless of when the insurance policy was taken out and obtained, the insurance company must have obtained a copy of the certificate of registration. As a result, the appellant exerted every effort to obtain a duplicate certified copy of the truck’s registration certificate. However, due to the truck theft allegation, the computer containing the registration information has been secured, and the RTO has declined to provide a duplicate certified copy of the registration. Hence, considering the specifics of the case, non-settlement of the claim can be deemed a deficiency in service when the appellant submitted a photocopy of the certificate of registration and the registration particulars as supplied by the RTO, solely on the basis that the original certificate of registration (which has been stolen) is absent. The insurance companies are denying the claim on technical and/or specious grounds.
Additionally, the court noted that the insurance company in this particular instance settled the claim in an arbitrary and overly technical manner. “As requested, the appellant has provided the documents that were not within its purview to acquire or provide.” During a particular incident involving the theft of a truck for which a substantial premium was required to obtain valid insurance, the insurance company should not have become overly technical and should not have denied the claim on the grounds that the appellant failed to provide a duplicate certified copy of the certificate of registration, which was unattainable due to unforeseen circumstances.
The Supreme Court ruled that an insurance policy is deemed effective from the date of issuance rather than the date of proposal or receipt issuance.
Case Title: Reliance Life Insurance Company Ltd Vs. Jaya Wadhwani., Diary No.- 12162 – 2019
Summary
The Supreme Court has ruled that the date of policy issuance is the pertinent date in an insurance protection context. The court disregarded the Consumer Forums’ contention that the commencement of the policy occurs on the date the initial deposit receipt of premium is issued. The court also explained that the date of proposal cannot be considered the date of policy unless both the initial deposit and policy issuance occur on the same date. The court also noted that a cheque alone might not be sufficient as collateral for the deposit. The case involved a life assured who committed suicide, and the Supreme Court reviewed clause 9 of the policy’s privileges and conditions. The court emphasized that reinstatement should have been taken into account, as the policy specifies that the 12-month period begins from the date of policy issuance or reinstatement.
About the case
The Supreme Court ruled that the date of policy issuance is the pertinent date for all intents and purposes in an insurance protection context. The matter at hand regarding the date the policy enters into force was before the court. It was unclear whether the date the policy is issued, the date of commencement specified in the policy, or the date the deposit receipt or cover note is issued would constitute that date. “In the present appeals, we do not find any such issue of backdating,” the court ruled. “For all intents and purposes, the date of issuance of the policy shall be the relevant date, not the date of proposal or receipt issuance.”
Justices Vikram Nath and Rajesh Bindal concurred. In doing so, the Court disregarded the Consumer Forums’ contention that the commencement of the Policy occurs on the date the initial deposit receipt of premium is issued. The Court also explained in its decision that, absent an initial deposit, the date of proposal cannot be considered the date of policy. It also specified that a cheque alone might not be sufficient as collateral for the deposit. “The date of proposal cannot be considered the date of policy until and unless both the initial deposit and policy issuance occur on the same date. For instance, if the premium is paid in cash on the date of proposal, the policy could be issued promptly. Mere submission of a cheque for tender may not suffice, as the contract would remain inactive until the cheque is cashed. The cheque’s issuer may revoke payment at any time after the cheque has been issued, insufficient funds may be available in the account from which the cheque is drawn, or there are numerous other possible reasons why the cheque might be returned uncashed. Two sets of appeals were pending adjudication, in which the life assured had committed suicide. Upon the demise of the insured, the District Forum, State Commission, and National Commission all determined that the appellant (Reliance Life Insurance Company Limited) is obligated to pay the sum assured. In light of this context, the issue was brought before the Supreme Court.
The Court initially reviewed clause 9 of the Policy’s privileges and conditions as well as the terms and conditions. 9. Suicide: The Company shall not be liable for any death benefit claims resulting from the Life Assured’s suicide within 12 months from the date of policy issuance or reinstatement, regardless of mental state. The court made the following observation in light of this: “Insofar as the policy specifies that the 12-month period begins from the date of policy issuance or reinstatement, reinstatement should have been taken into account.” Among the precedents that bolstered the Court’s position was Life Insurance Corporation of India v. Mani Ram. The court ruled in that case that the date of policy issuance remained applicable despite the implementation of backdating. As a result of these circumstances and facts, the Court set aside the challenged order and rendered the aforementioned observations.
