Landmark judgments on insurance that affect you

Numerous changes have been brought into effect by insurance companies over the years.

Numerous changes have been brought into effect by insurance companies over the years after consumer courts have ruled against them. However, a claim can also be awarded on humanitarian grounds even if the insurance company is right like in the case of United India Assurance Vs. Laxamma wherein the defendant had deposited a premium cheque which bounced. When the insured died, the court ordered the company to pay the claim amount, stating that they weren?t informed about the cheque bouncing before the claim was placed.

Let us look at three landmark judgement that took place this year that will impact any insurer.

Laser eye Surgery

The case of KP Desai Vs. United India Insurance Company, Maharashtra State Consumer Disputes Redressal Commission, January 31.

When KP Desai underwent a laser eye surgery for correcting his eyesight, it cost him Rs 50,000. Desai had a health insurance policy with the United India Insurance Company since 1990, which he renewed every year. After the surgery in 1997, when he filed a claim for the surgery expenses, the company rejected it stating that the surgery was purely cosmetic and not covered by the insurance. Desai filed a complaint with the South Mumbai District Consumer Disputes Redressal forum in 1997 and the judgement ruled in his favour in April, 2004. The insurance company then filed an appeal with the Maharashtra State Consumer Disputes Redressal Commission, where the judgement was upheld.

Transfer of Car Ownership

The case of New India Assurance Vs. Ashok Kumar, National Consumer Disputes Redressal Commission, March 19.

Ashok Kumar purchased a second hand car in November, 2006, which was insured by New India Assurance by the previous owner. Kumar did not inform the insurance company about the registration transfer or get the insurance policy transferred to his name. When Kumar filed a claim on the car being stolen in March, 2007, his claim was rejected on the grounds that the claim was not in his name. Kumar filed a lawsuit and the Delhi District Commission and the State Commission ruled in his favour. New India Assurance filed an appeal with National Consumer Disputes Redressal Commission, which ruled in its favour stating the Irda regulation according to which the insurance company must be informed about the vehicle transfer within 14 days, if not, the insurance company is not liable to reimburse the claim.

Fire damage need not be caused by fire alone

Consumer Education & Research Society, Bileshwar Khand Udyog Sahakari vs. IFFCO-Tokio general insurance, National Consumer Disputes Redressal Commission, March 19.

Ahmedabad-based Consumer Education & Research Society; Bileshwar Khand Udyog Sahakari paid a premium of Rs 38,520 for a Rs 2.25 lakh fire cover from IFFCO-Tokio General Insurance for a stock of molasses. While the policy was still being validated, a portion of the stock was burnt due to spontaneous combustion. The insurance company rejected the claim on the grounds that the stock was not burnt by an actual fire. The National Consumer Disputes Redressal Commission ruled in the favour of the insured, stating that this amounted to deficiency of service on the insurance company?s part and it was liable to pay damages amounting to Rs 1.14 lakh along with 10 per cent interest per year from 2003 onwards.

How these 3 Judgments Affect Policyholders?

In the first case, health insurance will, henceforth, cover corrective surgeries but that also means a higher premium and more disclosures.

The second case was very straightforward as Irda regulations are clear-cut about disclosures, especially with respect of transfer of the property being insured. So, it is important to read through the policy offer document clearly to understand the rules for the transfer of policies and the insurance company must be informed about any major changes.

In the third case, henceforth, insurance companies are liable to pay for the damages to stock occurring due to fermentation, natural heating or spontaneous combustion under a fire policy.

The author is CEO,

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First published on: 03-06-2013 at 08:47 IST