Make sure you give correct details for buying insurance policy
Whenever you buy an insurance policy, make sure that you do not misrepresent facts, as that could really jeopardize your claim and cause you immense financial loss. A recent decision of the consumer court, upholding the repudiation of a claim pertaining to a motor vehicle insurance, drives home this point really hard.
The central point in this case was the rejection of a claim made by Vinod Kumar, a resident of Mysore, following an accident involving his vehicle- a Volkswagon Jetta, on September 16, 2014. Purchased in 2012, the vehicle was insured with Bajaj Allianz General Insurance Company from January 8, 2014 to January 8, 2015. Kumar had paid ₹30,003 towards the premium
In response to Kumar’s complaint before the consumer court, the insurance company argued that the policy was vitiated on account of the policyholder giving false information at the time of purchasing the policy.
The insurer’s case was that the policy holder had claimed that the car was insured the previous year with Reliance General Insurance and that he was entitled to a 20 per cent discount as ‘No Claim Bonus’ (NCB). However, the cheque issued by the consumer to Reliance General Insurance the previous year had been dishonoured and so the insurer had not issued the policy at all. Thus he neither had a vehicle policy the previous year nor was he entitled to NCB. So on grounds of misrepresentation and suppression of material facts, the policy stood vitiated and the insurer was not liable to indemnify the loss.
The National Consumer Disputes Redressal Commission agreed with the lower consumer courts’ view that the insurer was justified in not honouring the claim. Quoting the Supreme court in Life Insurance Corporation of India Vs. Smt. Asha Goel, and Reliance Life Insurance Co Vs. Rekhaben Nareshbhai Rathod , the Commission said there was no illegality in upholding the repudiation of the claim .(Vinod Kumar Vs Manager, Bajaj Allianz General Insurance Company, RP No 2277 of 2019, decided on August 4, 2021)
Thus the consumer not only lost the huge premium he had paid towards the insurance, but also the insurance money for repairing the car. On the other hand, if he had spoken the truth, he may not have got the 20 per cent discount on the premium, but his policy would be intact and the insurer would have had no ground for rejection of his claim.
Consumers may not be aware that in case of lapse of motor vehicle policy by even one day, the vehicle has to be inspected by the insurer before issuing a policy. And even if the policy holder has not made any claim previously, if a comprehensive policy is allowed to lapse for over 90 days, the accrued benefit of ‘No Claims Bonus’ is lost. In other words, if you have a good NCB to your credit, it is important to ensure that there is no break in your vehicle insurance.
So always pay your premium on time , preferably through an electronic payment mode and ensure that the policy is issued immediately. Under the Motor Vehicles Act, you cannot take your vehicle on a public road without a third party liability insurance. And remember, the contract of insurance is a contract of utmost good faith and both the parties to the contract have to ensure that there is no misinformation or non-disclosure of material facts.
Usually when you change your insurer during renewal or take a fresh policy on a new car, in order to claim the NCB discount, you need to produce a certificate of proof from your previous insurer. In fact, if you look at the insurance regulator’s web page meant for policy holders, it says that the proof can be the renewal notice from the current insurer or your original expiring policy along with a certification from your previous insurer, saying that you have lodged no claim on the expiring policy. Obviously, in this case the insurer did not do due diligence and insist on that proof from the consumer! And in the bargain, earned a hefty premium, without having to fulfill its part of the contract of insurance.