‘Indifferent’ insurance companies face SC ire
Court Slams ‘Take It Or Leave It’ Attitude On Claims
Dhananjay Mahapatra | TNN
New Delhi: There’s good news for motor vehicle owners who are mandatorily required under the law to insure their vehicles but face indifferent attitude from insurance companies when they seek compensation for accidental damage. Not only has the Supreme Court sympathised with their suffering, it has also lashed out at them for adopting a ‘take it or leave it’ attitude.
Whenever a claim is put forth before an insurance firm to compensate the cost of repairs of an insured vehicle which has met with an accident, they arrive at a figure at their whim and fancy and put the onus on the owner to either take it or leave it, the court said.
A bench of Justices Altamas Kabir and H S Bedi said Section 146 of the Motor Vehicles Act made it mandatory for owners to take insurance cover for vehicles and failure to do so was a punishable offence.
It was obvious that insurance companies enjoy a dominant position due to this stringent provision and act in an unreasonable manner, the SC said, adding they often fix a value of a particular insured good, but disown that very figure on one pretext or the other when they are called upon to pay compensation.
“This ‘take it or leave it’ attitude is clearly unwarranted not only as being bad in law but ethically indefensible,” the bench said. The insurance firm was bound by the value of the vehicle at the time of renewal, it added.
The case in question related to the insurance policy for a Tata Sumo for which Oriental Insurance Company was paid a fee reducing every year due to depreciation in the value of the vehicle. At the time of the policy’s last renewal, the value of the vehicle was accepted at Rs 3,54,000 in 2002.
Shortly after the renewal, the car met with an accident and the repair cost was put at Rs 3.37 lakh.
But the insurance firm assessed the compensation at Rs 1.04 lakh and when the owner disputed it, it did not pay a penny. The district consumer forum refused relief, accepting the insurance firm’s stand that the vehicle’s driver did not have a licence.
The Madhya Pradesh state forum allowed Rs 1.04 lakh. But the national consumer forum directed the insurance firm to pay Rs 1.80 lakh with interest.
The SC, allowing the appeal of vehicle owner Dharmendra Goel, asked Oriental Insurance Company to pay Rs 3.44 lakh as compensation. As the accident took place seven months after renewal of the insurance policy, it reduced the estimated value of the vehicle by Rs 10,000.