Insurance companies shouldn’t be too technical when settling claims: SC

New Delhi: The Supreme Court said insurance companies should not be too technical when settling claims and request documents that the insured is unable to produce due to circumstances beyond their control.

A bench of judges MR Shah and BV Nagarathna observed that insurance companies deny claims in many cases on ‘wealthy grounds’.

The high court’s observation came while allowing an appeal against the August 2021 order of the National Consumer Dispute Redress Commission (NCDRC) in a matter relating to the settlement of a claim under the insurance policy for a stolen truck in 2013.

The bench said the appellant, who was the owner of the truck, was wrongly denied the insurance claim and that the insurance company got too technical when settling the claim and acted “arbitrarily “.

The Supreme Court noted that the insurance claim had not been settled primarily on the grounds that the appellant had produced neither the original of the registration certificate nor even the duplicate of the certified true copy of the certificate of registration issued by the RTO.

The caller was asked to provide documents that were beyond his control to procure and provide, he said, adding that once there was valid insurance and the truck was stolen , the insurance company should not have become too technical and refused to settle the claim on failure to present the duplicate of the certified true copy of the registration certificate, which the appellant was unable to produce due to circumstances beyond his control.

In its order, the Supreme Court said: “In many cases, insurance companies turn out to deny the claim on flimsy and/or technical grounds. When settling claims, the insurance company should not be too technical and ask for documents, which the insured is unable to produce due to circumstances beyond his control.

It ruled that the appellant is entitled to the insurance amount of Rs 12 lakhs plus 7% interest from the date of submission of the claim.

It also quashed the order issued by the Durg District Consumer Dispute Redress Commission in Chhattisgarh dismissing the complaint filed by the Appellant as well as the orders passed by the State Commission and the NCDRC confirming the same .

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