The State Consumer Disputes Redressal Commission, Madhya Pradesh, with Mr. A.K. Tiwari presiding as the Member and Mr. Shrikant Pandey as the Member, reaffirmed that in cases where there is no ‘fundamental breach’ of an insurance policy, the insured can claim up to 75% of the incurred expenses on a non-standard basis from the Insurance Company. Non-standard claims typically involve negotiations when not all terms, conditions, and warranties of the policy are fully adhered to.
Key Details
The complainant insured his Swift Desire car with Iffco Tokio General Insurance Company (“Insurance Company”) and paid a premium of Rs. 15,726/-. During the policy period, the car was involved in an accident resulting in substantial damages. Repair expenses amounted to Rs. 3,93,123/-, which the complainant submitted to the Insurance Company for claim settlement. However, the claim was denied on grounds that the car was being used as a ‘taxi’ at the time of the accident.
Aggrieved by this decision, the complainant filed a consumer complaint with the District Consumer Disputes Redressal Commission, Chhindwara, Madhya Pradesh (“District Commission”). The District Commission ruled in favor of the Insurance Company, finding no deficiency in their actions. Unhappy with this outcome, the complainant appealed to the State Consumer Disputes Redressal Commission, Madhya Pradesh (“State Commission”).
The complainant argued that despite the commercial use of the car, as indicated in the FIR and supported by the surveyor’s estimate of losses amounting to Rs. 1,11,205/-, he was entitled to receive 75% of these expenses on a non-standard basis from the Insurance Company, citing the precedent set in Amalendu Sahoo vs Oriental Insurance Company Ltd. [II (2010) CPJ 9 (SC)].
The Insurance Company countered by pointing out that the FIR filed by the complainant acknowledged the car was rented out commercially at the time of the accident, thereby violating the policy terms.
Observations by the State Commission
The State Commission reviewed the FIR and acknowledged that the car was indeed being used commercially on a rental basis, which constituted a breach of the policy’s terms. However, it determined that this breach did not amount to a ‘fundamental breach’. Citing the precedent in Amalendu Sahoo vs Oriental Insurance Company Ltd. [II (2010) CPJ 9 (SC)], the Commission upheld that in such cases, the insured can claim up to 75% of the incurred expenses.
Consequently, the State Commission overturned the District Commission’s decision, ordering the Insurance Company to pay 60% of the Rs. 1,11,205/- loss assessed by the surveyor, along with 6% simple interest to the complainant. Each party was directed to bear their own costs.
Posted and reproduced in Public Interest by
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