Consumer Forum Penalises Insurer for Unfair Claim Rejection
A consumer forum in Karnataka has penalised an insurance company for unfairly rejecting a policyholder’s claim, highlighting the importance of fair claim settlement practices.
The consumer panel in Hubballi directed the insurer to pay compensation after finding deficiencies in claim handling. The case raised concerns regarding claim rejection procedures and the need for insurers to provide valid reasons when denying policy benefits.
The dispute arose after a policyholder approached the forum following rejection of an insurance claim despite having policy coverage. The complainant argued that the rejection caused financial hardship.
After reviewing the matter, the forum concluded that the insurer’s actions amounted to deficiency in service and ordered compensation.
The case highlights that claim decisions must be supported by policy terms, proper documentation and clear explanations. Transparent assessment and timely communication remain essential for maintaining policyholder confidence.
Bike taxis pose safety, insurance concerns: Karnataka to SC
The Karnataka government has approached the Supreme Court against a High Court ruling that paved the way for motorcycles to be registered and permitted as bike taxis, arguing that allowing two-wheelers to carry passengers for hire without a dedicated regulatory framework could compromise passenger safety and insurance protection.
The state has challenged the January 23 judgment of the Karnataka High Court Division Bench, which directed authorities to consider applications for registering motorcycles as transport vehicles and issuing permits for their use as bike taxis.
The matter arose from appeals filed by Ola, Uber, Rapido, motorcycle owners and the Bike Taxi Welfare Association against an earlier order directing bike taxi operators to stop their services until the government formulated a policy permitting them.
In its special leave petition, Karnataka said the High Court had effectively transformed the transport authorities’ discretionary power to issue permits into a mandatory obligation. It argued that the Motor Vehicles Act, 1988, does not create an unconditional right to use a particular category of vehicle as a taxi.
Karnataka contended that restrictions on bike taxis were based on concerns including road congestion, pollution, passenger safety and the comparatively higher fatality risk associated with two-wheelers.
‘No insurance, no fuel’: SC directs Centre to launch pilot project
In a significant verdict, the Supreme Court took serious note of a large number of vehicles plying without third-party insurance cover and directed the Centre to evolve a pilot project by which fuel for vehicles can be refused at petrol pumps until valid insurance is obtained.
The top court took note of the number of road accidents on national highways and also the effect of long queues at toll plazas, and directed the Centre to implement pilot projects on certain corridors, substituting the process of stopping at toll plazas with automatic detection of vehicles passing through toll points.
A bench of Justices Sanjay Karol and Prashant Kumar Mishra, which flagged the lack of compliance of provisions of the Motor Vehicles Act requiring all vehicles to have a valid insurance policy covering third parties, said it is shocking to learn that nearly 56 per cent of vehicles plying on Indian roads remain uninsured according to the Report of the Standing Committee on Finance 202425.
“As deliberated upon in court, the IRDA (Insurance Regulatory and Development Authority) in consultation with the MoRTH (Ministry of Road Transport and Highways) to deliberate and evolve a pilot project whereby fuel for vehicles to be linked with valid insurance status. In the absence thereof, the vehicle concerned would be refused fuel at petrol pumps, until such time that valid insurance is obtained,” the bench said.
SC criticises insurers for ‘sloppy’ policy terms
The Supreme Court (July 20, 2026) observed that the practice of insurers drafting “ambiguous” and “sloppy” insurance policies to escape liabilities they ought to bear had caused ordinary policyholders to suffer. The court said such “uncertainty” was also creating hurdles in the timely disposal of motor accident compensation claims.
A Bench of Justices Sanjay Karol and N Kotiswar Singh observed that insurance companies must use clear and precise language while drafting standard-form insurance contracts to avoid multiple interpretations. “When the party with all the drafting power writes an ambiguous policy, it is the ordinary policyholder who suffers.
Insurers have, in many cases, exploited this ambiguity, either to escape liability which they should rightfully bear, or, conversely, found themselves burdened with liability they never intended to assume simply because their policy language was sloppy,” the Bench observed.
The observations came while the court was hearing an appeal filed by the Oriental Insurance Company against a February 4, 2025 judgment of the Chhattisgarh High Court directing it to pay Rs. 32.67 lakh as compensation in a motor accident claim.
The case arose from an accident involving a vehicle insured with the company, which was carrying passengers on a religious tour to various destinations in Nepal. The vehicle collided with a hill, killing three persons, including the driver, Riaz Khan, and passenger Harish Yadav. Following the accident, Yadav’s wife, children and mother filed a claim petition before the Motor Accident Claims Tribunal (MACT) seeking compensation of Rs. 48.99 lakh.
The Tribunal directed the owner of the vehicle to pay the compensation along with interest at 6 per cent per annum from October 22, 2011, the date of institution of the claim petition. However, the High Court modified the award and held the insurer liable to satisfy the claim instead of the vehicle owner.
Does the 2019 consumer law cover commercial services
Kavishri Healthcare, run by Swati Singh, became a franchisee of Culfit Healthcare under an agreement executed on July 20, 2024. Cultfit was described as a fitness chain company with the know-how and experience to set up a chain of fitness centres. The five-year franchise agreement contained termination and assignment clauses. It stipulated obligations and covenants regarding intellectual property rights and confidentiality. It also provided that any dispute would fall within the jurisdiction of the courts at Bengaluru.
Singh invested over Rs. 5 crore to set up and run a centre as a franchisee. However, disputes arose over alleged coercive tactics, financial accounting, revenue management, staffing, operations, advertising and marketing. A civil suit was also filed over certain disputes.
Finally, Singh filed a consumer complaint before the National Consumer Disputes Redressal Commission (National Commission), alleging deficiency in service and unfair trade practice.
Cultfit opposed the consumer complaint on the grounds that the services were commercial in nature and the complaint was not maintainable under the Consumer Protection Act.
The National Commission observed that, in Shriram Chits (India) Private Limited vs Raghachand Associates, the Supreme Court had clarified that, under the old Consumer Protection Act of 1986, commercial services availed of to earn a livelihood through self-employment were covered under the Act, but this exemption is no lover available under the 2019 Act.
The National Commission noted that the dispute raised multiple complex questions of fact and involved large-scale commercial transactions. It therefore concluded that the appropriate remedy lay before a competent commercial court and that the complaint fell beyond the scope of the Consumer Protection Act and was not maintainable before a consumer forum.
