Motor Insurance case study with United India Insurance - More than one passenger

This is an interesting case that I found on the internet. This case was between United India Insurance and the owner of a JCB that met with an accident. The JCB in question at the time of the accident had two occupants when in fact the JCB has as per its manual only one seat. This made United India Insurance reject the claim stating this was in violation. But the court rejected this view taking and allowed this claim to be paid as non standard. The details of the claim are stated below.

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CASE DETAILS
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Surinder Singh son of Sh.Dalip Singh Prop of M/S Surender Traders resident of village Brot, Post Office Barsu, Tehsil Sadar, District Mandi, H.P

…Complainant.

V/S



United India Insurance company Ltd Divisional Office at Jail Road, Mandi Town, District Mandi, H.P./ through its Divisional Manager.

..Opposite party.








ORDER.

This order shall dispose of a complaint under Section 12 of the Consumer Protection Act, 1986

( hereinafter referred to as the “Act”) instituted by the complainant against the opposite party. The complainant averred that he is registered owner of vehicle No. HP-65-3499 ( JCB)which was duly insured with the opposite party vide policy Annexure C-2 for the period from 16-6-2008 to 15-6-2009under comprehensive insurance policy. That the JCB in question met with an accident on 26-7-2008 at Palampur ,District Kangra due to sudden failure of brakes while it was being driven by complainant himself having valid driving license . The accident was promptly reported to the opposite party who deputed their surveyor for inspection of damage caused to the JCB in the accident who after inspection advised him to repair the vehicle from some authorized dealer. The vehicle was repaired by spending Rs.80,000/- at Nerchowk . After repair of the vehicle, the same was again inspected by the surveyor of the opposite party and all the original cash memos of entire repair and spare charges and entire copies of documents were submitted to the surveyor for early settlement of the claim . The complainant averred that at the time of the accident one helper Sh. Panku @ Om Parkash son of Sh.Chand Ram was also injured in the accident of the vehicle .


The complainant further averred that the claim was not settled by the opposite party and he had served the opposite party with legal notice dated 20-11-2008 ,but despite that the claim was not settled nor responded the notice which act on the part of the opposite party amounts to deficiency in service as well as unfair trace practice .With these averments , the complainant had sought a direction to the opposite party to pay Rs.80,000/- as own damage claim of the vehicle alongwith interest at the rate of 12 % per annum from 26-7-2008 till final payment Apart from this, Rs.20,000/- as also been claimed as compensation besides costs of complaint.

2. The opposite party filed reply wherein it had taken preliminary objections that the complainant is not a consumer of the opposite party and as such the complaint is not maintainable and that there is no deficiency in service on its part. On merits ,the opposite party had admitted the insurance of the vehicle and its accident . It has been admitted that information of accident was given to it. It has also been admitted that the complainant had repaired the vehicle but it has been denied that he had spent a sum of Rs.80,000/- but pleaded that the surveyor deputed by it had assessed the loss vide report dated 30-8-2008 Annexure O-1 at Rs.46,067.94 paise as per the terms and conditions of the policy subject to deposit of salvage , value of which had been assessed at Rs.5500/-.


The opposite party had pleaded that while processing the claim it was found that one unauthorized person was being carried in the vehicle at the time of the accident and as per the registration certificate the seating capacity of the vehicle is One only i.e. driver and since it is violation of terms and conditions of the insurance policy, therefore ,the opposite party was constrained to repudiate the claim and same was duly communicated to the complainant vide letter dated 21-1-2009 Annexure O-2. Rest of the contents of the complaint have been denied being wrong. The opposite party had prayed for dismissal of the complaint .

3. The complainant had filed rejoinder reiterating the contents of the complainant and controverted those as made in the reply.

4. We have heard the ld. counsel for both the parties and have carefully gone through the record. Be it stated that the insurance of the vehicle and its accident is not in dispute. However, the claim of the complainant has been repudiated on the ground that one unauthorized person was sitting in the vehicle at the time of the accident alongwith driver whereas the seating capacity of the vehicle is only one i.e. Driver.


The fact that one other person was also sitting in the vehicle has also not been disputed by the complainant and in the complaint it has been pleaded that at the time of accident one helper Sh, Panku @ Om Parkash son of Sh. Chand Ram also sustained injuries . The perusal of the registration certificate annexure C-1 reflects that seating capacity of the vehicle is only one i.e. driver . Therefore, in view of the admission of the complainant himself , it has become clear that one other person was sitting in the vehicle in question alongwith driver. Since the seating capacity of the vehicle is one, therefore, we have no hesitation to conclude that the vehicle was being plied in violation of the terms and conditions of the insurance policy.

5 The next question, which arises for determination is as to whether the opposite party was justified in repudiating the claim of the complainant as a whole on this score or not .The answer to this poser in all fairness would be in the negative for the reason that opposite party had failed to prove and establish that the carrying of one unauthorized passenger in the vehicle was the sole and contributory cause of the accident. No evidence has been led by the opposite party to this effect. In our opinion, it cannot be said that said breach is such a breach that the owner should in all event be denied indemnification.


This breach cannot be termed as fundamental breach empowering the opposite party to repudiate the claim as a whole . As a matter of fact , the complainant or his driver by allowing unauthorized passenger in the vehicle has contravened the limitation clause as to use in the policy and in case of such breach, it is clause 10 of the Procedural Manual of Motor Claims which is applicable and as per the same , where there is any breach including breach of limitation as to use , the claim has to be considered and paid as Non Standard claim. The clause 10 of the Procedural Manual of the Motor Claim is reproduced here asunder:-

“ 10. Non Standard Claims .

Following standard claims

Following types of claims shall be considered as non standard claim and shall be settled as indicates below after recording the reasons.



Description Percentage of settlement

Under declaration Deduct 3 years difference

Of licensed carrying in premium from the

Capacity amount of claim or deduct 25 % of claim amount whichever is higher



Overloading of Pay claims not exceeding

Vehicle beyond 75% of admissible claim

Licensed carrying

Capacity



Any other breach Pay up to 75% of admissible claim

Of warranty/condition

of policy including

limitation as to use





6 The Hon’ble National Commission in its

various decisions had held that if the vehicle is used contrary to the terms and conditions of the policy, the insurance company has to treat the claim as per the guidelines applicable for settlement of non standard claims and the percentages are also duly indicated in clause 10 of the Procedural Manual of Motor Claims . In the case titled National Insurance Company vs Muni Lal Yadav 2001(2) CPR-1( NC), the vehicle was insured as private vehicle but used as public vehicle at the time of accident. Hon’ble National Commission after relying upon the observations of Hon’ble Supreme Court in the case of B.V. Nagaraju vs M/S Oriental Insurance Company ltd II(1996)CPJ-18(SC) and M/S Skandia Insurance company ltd vs Kokilaben Chaudravadan 1987(2) SCC-654 had held that the claim is to be settled in accordance with Skandia’s case approved in B.V. Nagaraju case and according to Motor Claims guidelines applicable for settlement of non standard claims.


In the present case also , the claim of the complainant is covered under clause 10 of the Procedural Manual of Motor Claims which provides that for “ any other breach of warranty/ condition of policy including limitation as to use” the claim shall be settled as non standard claim and pay up to 75% of the admissible claim. Therefore, in view of the aforesaid decisions of Hon’ble Apex Court as well as of the Hon’ble National Commission and also in view of the Motor Claims guidelines, it will be appropriate to direct the opposite party to treat the claim of complainant as non standard claim and to pay 75% of the compensation to which he is entitled.

7 Now the next question which arises for consideration before this Forum is as to what amount the complainant is entitled on account of loss suffered by him due to accident of the vehicle .The complainant in his complaint had claimed Rs.80,000 /- as repair charges .On the other hand, the opposite party has stated in its reply that loss assessed by the surveyor is Rs.46067/- subject to deposit of salvage, value of which has been assessed at Rs. 5500/-.The opposite party has also adduced in evidence the copy of report of Surveyor Sh. Mohinder K Sharma Annexure O-1which corroborates the version of the opposite party that the loss assessed by the surveyor on account of accident of the vehicle in question is to the tune of Rs.46067/- and value of salvage has been assessed at Rs.5500/-.The report of Surveyor is an important document and it cannot be brushed aside without sufficient reasons.


The Hon’ble National Consumer Disputes Redressal Commission in United India Insurance company vs Jadhav Kirana Store , III (2005)CPJ-79(NC) has held that the Surveyor report is an important document and it should not be shunned without sufficient reasons. Therefore, in the absence of any satisfactory evidence to the contrary , we accept the report of Surveyor and in view of the same , we hold that the liability of the opposite party with respect to the damage caused to the vehicle is Rs.46,067/- subject to deposit of salvage and the complainant is entitled to 75% of this amount which comes to Rs.34,550/-.

8 In the light of above discussion, the complaint is partly allowed and the opposite party is directed to pay Rs.34,550 /- with interest at the rate of 9% p.a. from the date of filing of the complaint till realization subject to the deposit of salvage value of which has been assessed at Rs.5500/-. If the complainant fails to deposit the salvage in that event the opposite party shall be entitled to deduct the amount of salvage as assessed by the surveyor .In addition to this, the opposite party is also directed to pay Rs.1500/- as costs of litigation to the complainant.

9 Copy of this order be supplied to the parties free of cost as per Rules.



10 File, after due completion be consigned to the Record Room.