An Insurance Company cannot reject the claim on the ground of delay in Intimation

The Supreme Court recently held that an insurance company cannot reject a claim merely on the ground of delay in intimation of theft of an insured vehicle. 

The Bench of Justices Sanjiv Khanna and Bela M Trivedi was hearing an appeal against the National Consumer Disputes Redressal Commission (NCDRC) that had allowed the insurance company to reject a claim of the appellant on the ground of the delay.

FACTS

The appellant insured his truck by the respondent insurance company. On November 4, 2007, his truck was stolen, the next day, the appellant filed a First Information Report (FIR). The police were not able to trace the truck but arrested the accused. On 23 August 2008, It filed an untraceable report. Thereafter, the appellant lodged a claim with the insurance company. However, the insurance company failed to settle the claim. 

Aggrieved, the appellant moved the District Consumer Disputes Redressal Forum. During the pendency of the complaint, the insurance company denied the claim on the mere ground of delay in informing it of the incidental loss. However, the District Consumer Disputes Redressal Forum allowed the appellant's claim. 

The insurance company moved to the State Consumer Disputes Redressal Forum, which was dismissed. On appeal, the NCDRC allowed the plea of the insurance company, leading to an appeal before the Supreme Court by the appellant.

HELD

The SC relied on its 2020 decision in Gurshinder Singh v. Shriram General Insurance Company Limited and Another, wherein it was held that when an insured has lodged an FIR immediately after the theft of a vehicle and a final report has been lodged by the police after investigation, then mere delay in intimating the insurance company about the incident cannot be a ground to deny the claim of the insured.