gloss over the exclusion clauses at the point of sale and use them only when a claim is made.
Many cell phone insurance policies, for example, do not cover “mysterious disappearance”. What is mysterious disappearance? Well, legal dictionaries describe it as the loss of an insured object in an unexplained manner or where there is no direct evidence as to how the object disappeared or where the cause of disappearance cannot be identified.
So let us look at a hypothetical situation—you keep your mobile on the roof of your car and bend down to tie your shoe lace. By the time you straighten up, the mobile phone is gone. Since it cannot vanish into thin air, the obvious inference is that it has been stolen. However, the insurer may well repudiate your claim on the ground that it constituted ‘mysterious disappearance’.
A survey conducted by the Symantec Corporation in January 2011 had shown that 53 per cent adults in India have been victims of mobile phone loss or theft. I am sure a large percentage of such losses would come under the exclusion clause of ‘mysterious disappearance’ or ‘misplacement’, meaning you kept it or left it in a wrong or inappropriate place. A couple of years ago, the Chennai Police had analysed the complaints of mobile phones received by them—around 150 daily — and said that while 50 were stolen by pick pockets, 30 were snatched and another 70 were misplaced!
These days, not only mobile phone manufacturers but also retailers (including online shops) and service providers are offering cell phone insurance (at a price) as an incentive. So, it will be useful to find out what it covers and what it does not—get clarity on clauses like ‘misplacement’ and ‘mysterious disappearance’ and do not buy unless you are convinced of its usefulness.
In fact the IRDA (Protection of Policy Holders’ interest) Regulations, 2002, casts a duty on the insurer and his intermediaries to explain ‘in an explicit manner’ to the consumer, the extent of the cover, the exclusion clauses and the terms and conditions. And those who fail to comply will lose the right to repudiate a claim on the basis of exclusion clauses that are not explained to the consumer. This is the law as laid down by the National Consumer Disputes Redressal Commission in 2007.
Interestingly, this order of the commission was in response to two complaints pertaining to rejection of claims against theft of mobile phone. While in one case, where the instrument was stolen from a handbag, the insurer had rejected the claim saying there was ‘absence of actual or threatened force’, in another, where the mobile was stolen from a car, the insurer said there was ‘absence of forced and violent entry or exit’.
In both these cases, the consumer court held the insurer liable for having failed to explain the exclusion clauses to the consumer, as required under the IRDA Regulation. (National Insurance Company Vs Shri D.P.Jain, RP No 186 of 2007 and NIC VS Shri Manjeet Kumar, RP NO 187 of 2007 )
Basant Nigam: Someone stole my brand new mobile phone from my shirt pocket while I was getting into a train at the New Delhi railway station, but the insurance company is refusing to pay. What should I do?
Lodge a complaint with the Insurance Ombudsman. You will get the address of the Ombudsman and other details from the website: www.policyholder.gov.in