Case Title: Gurmel Singh vs Branch Manager, National Insurance Co. Ltd. | (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.
Frequent instances involve insurance companies denials of claims on the basis of feeble and/or technical considerations. When resolving claims, it is advisable for the insurance company to avoid excessive technicality and refrain from requesting documents that the insured is unable to provide due to unforeseen circumstances. The court, in granting the appeal, determined that the appellant is warranted the insurance sum of Rs. 12 lakhs, in addition to interest at the rate of 7% from the date the claim was submitted. The court further ordered the insurance company to reimburse the appellant for the litigation expenses amounting to Rs. 25,000.
