Claiming insurance can often become a very strenuous andprolonged task. In fact, insurers tend to find ways to reduce the claim amountor avoid making a settlement altogether but consumer protection laws seek toprotect consumers from such deficiencies in insurance services. The ConsumerProtection Act (CPA), caters to such fraudulent practices, administers separateclauses for insurance consumer complaints, covering a diverse range ofproducts, from general insurance to vehicle insurance.
Consumer protection laws in India enable you to dispute acase against an insurance provider where there has been a deficiency on theirpart. Deficiency in insurance services arises when there is a default ornegligence on the provider’s part to settle a claim. An unreasonable delay inmaking the payment on a claim also amounts to deficiency of services.
The claim of the insured, it must be clearly understood,will not take off the ground if he is unable to establish that there was alegally valid and subsisting contract of insurance between him and the insurerwhen the event insured against happened.
In Indian Hardware Stores v. United India Insurance Ltd –The complainant got a policy of fire insurance. On its expiry, he requested the insurer to renew the policy. He forwarded a bank guarantee for full amountof premium payable for such renewal well before the expiry of the policy. Thereafter loss occurred by fire. The state commission dismissed the claim onthe ground that there was no valid policy of insurance on the date the lossoccurred. In appeal, The NationalCommission observed: “It is clear fromthe record that a request had been made to the insurer to renew the earlierinsurance policy in respect of the premises in question and the state bank ofTravancore had also forwarded to the insurer bank guarantee for the full amountof premium payable for such renewal well before the expiry of the previouspolicy. The State commission has actedillegally and erroneously in dismissing the complaint on the ground that therewas no valid policy”.
Insurance claims should as a rule, be settled as early aspossible so that the consumer may get legitimate benefits of their claimswithout delay in the event of a mishap. The law is now settled that undue delay in the settlement of aninsurance claim constitutes deficiency in the service of the insurance company.
In Shri Umedilal Aggarwal v. m/s. United India Assurance Co.Ltd. The National Commission held thatfailure on the part of the insurer to settle the claim of the insured within areasonable time would give rise to a course of action to the aggrieved consumerbefore the forum. What is reasonabletime of course would depend on the facts and circumstances of each case? A period of six months has, however been heldto be reasonable time for the insurers to decide a claim. In Uma Dutt Sharma v. National Insurance Co.The National Commission held that “Non-payment of settled amount of premium bythe insurers for a sufficiently long time for whatsoever reason it may beconstitutes a deficiency in service on the part of the insurance company.
The business of insurance has undoubtedly developed at afast pace over the years. It needs,however, to be seen whether, side-by-side, the insurance companies have alsoachieved consumer satisfaction.
The writer a social scientist and lawyer hasbeen a senior member for 10 years at the Consumer Court in Goa
