The Supreme Court has expressed concern over the increasing tendency of insurance companies to deny compensation to claimants of motor vehicle accidents.
A bench of Justices Altamas Kabir and H S Bedi lamented that insurance companies, being in a dominant position, often act in an "unreasonable" manner after having taken the premium.
"The insurance companies often act in an unreasonable manner and after having accepted the value of a particular insured goods, 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 remarked in its judgement.
The bench passed its observations while upholding an appeal filed by Dharmender Goel, owner of a vehicle.
Goel has insured his vehicle for Rs 3,54,000 which met with an accident. The Oriental Insurance Company, with which the vehicle was insured, repudiated the claim on the ground that the driver did not possess a valid driving licence.
The insurance company's surveyor had submitted a report that the vehicle suffered "total loss" and valued the loss at Rs 1.80 lakh.