`Delay in lodging theft complaint can cost consumer insurance claim'

`Delay in lodging theft complaint can cost consumer insurance claim'





Theft is a criminal of fence for which a police complaint has to be lodged. Earlier the complaint is lodged, better are the chances of the police nabbing the culprits and recovering the stolen property . Delay in lodging a police complaint gives the culprits an opportunity to escape with the burgled property .The consequences of delay in lodging a police complaint have been dealt with by the national commission in a recent judgment in the case of United India Insurance Company Limited vs Jogendra Singh.
Case Study: Singh had purchased a tractor for Rs 3,70,000. It was covered under a comprehensive policy issued by United India Insurance.During the intervening night of May 31 and June 1, 2005, the tractor, parked outside Singh's house, was stolen. Singh's brother informed the police of the theft and an FIR was registered on June 10. The police could neither trace the vehicle nor catch the culprit, and hence closed the investigation by a final report, which was also accepted by the criminal court.
The insurance firm refused to settle the claim on the grounds that it had learnt of the theft on June 13, 2005, through Canara Bank, that had financed the vehicle. The insurer alleged Singh had not taken care of the tractor and had failed to cooperate in search for the culprits. Challenging the repudiation, Singh filed a complaint before the district consumer forum. Contesting it, the firm justified the rejection on the grounds that a delay in reporting the incident to it constituted a breach of policy terms.
The forum held that the repudiation was not proper and ordered that the claim be set tled. The insurance company appealed to the Uttarakhand state commission, which concurred with the view taken by the district forum. The insurance company then filed a revision petition.
The commission considered the SC ruling in United India Insurance Company Ltd vs Ms Harchand Rai Chandan Lal, where it had held that policy terms, requiring the incident to the reported “immediately“, must be strictly construed to fasten liability on the insurance firm. So it is incumbent upon the insured to inform the police about the theft within 24 hours and the insurance company within a day or two, unless the insured is prevented from doing so due to some bodily injury . Any delay would result in loss of valuable time in attempting to trace the vehicle.
The national commission observed that Singh was unable to substantiate that the police had been intimated of the theft the very next morning.The FIR established that a complaint had been lodged on June 10, 2005. Even the insurance company was not informed promptly , and it learnt of the incident only 12 days later. It held that Singh had committed a breach of the policy terms by delaying reporting of the incident to the police and to the insurance company , thereby depriving the insurer of a valuable right to investigate whether a theft has indeed taken place.
The national commission concluded that repudiation of the claim was justified. It set aside orders of the district forum and the state commission and dismissed the complaint.
Conclusion: The insured must promptly report theft to the police. The intimation must be given in writing through a letter, so that even if there is a delay in registering the FIR, the date of intimation can be established. Similarly , the insurance company must also be intimated promptly . Any delay can prove fatal to a claim.