Car Claim Rejection: Delhi Consumer Commission Pulls Up New India Assurance Over IDV Dispute

NEW DELHI – Car Claim Rejection: The Delhi State Consumer Disputes Redressal Commission has directed New India Assurance Company Limited to pay a senior citizen Rs 6.92 lakh after the insurer rejected his motor claim for a car damaged in a night-time accident on December 31, 2020. In an order dated October 8, a bench headed by President Justice Sangita Dhingra Sehgal, with member Bimla Kumari, held that the insurer could not discard the insured declared value (IDV) it had itself put on the policy unless it proved misrepresentation with credible evidence.

The total consists of Rs 5,49,450 towards the insured amount, Rs 18,000 in parking charges, Rs 50,000 for mental agony and harassment, Rs 50,000 for inconvenience and expenses caused by the car being unavailable, and Rs 25,000 in litigation costs. The commission allowed the policyholder’s appeal against an earlier order of a district commission. That order, passed on February 27, 2025, had granted only the insured amount and had not ruled on the other heads of relief he had sought.

Car Claim Rejection: What happened on the Bahadurgarh-Jhajjar road

According to the complaint, the policyholder’s son was driving to Salasar on the night of December 31, 2020. He took the Bahadurgarh-Jhajjar road because other routes were reportedly blocked during the farmers’ agitation. At about 11.30 pm, with dense fog cutting visibility, he stopped to clean the windscreen. An unidentified truck then hit the parked car from behind and pushed it into a roadside culvert. The truck’s registration number could not be noted.

The car was covered by a policy running from December 19, 2020, to December 18, 2021, with an IDV of Rs 5,49,450. The accident therefore took place about twelve days after the cover began. The insurer appointed a surveyor on January 20, 2021. The policyholder said he supplied the documents asked for, answered the insurer’s queries and followed up repeatedly, but the claim stayed pending until it was finally rejected.

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Car Claim Rejection: Why the insurer rejected the claim

New India Assurance questioned whether the accident had happened as described. It pointed to the absence of visible signs of an accident at the spot and to the reported statement of a nearby hotel owner that he knew nothing about it. It also noted that nobody had been injured despite the extent of the damage, and that the truck had not been identified. The insurer further argued that the car was nearly 15 years old and that its market value was far below the IDV, alleging the insured value had been inflated.

Car Claim Rejection: What the commission held

The commission did not accept that suspicion could take the place of proof. It found nothing to show the policyholder had knowingly made a false declaration to get an undue benefit. It observed that the insurer had accepted the premium and issued the policy with the stated IDV without raising any objection. If the company thought the figure was wrong, it said, the time to examine it was when the policy was issued or renewed, not after a claim had been filed.

On the accident itself, the bench held that the circumstances relied on by the insurer, namely the lack of injuries, the unidentified truck and doubts about the scene, did not conclusively show the accident had not occurred, and were not enough on their own to prove fraud. It also took note of the time the claim had been left pending. The late appointment of an investigator and repeated requests for clarification, without a decision within a reasonable period, did not amount to satisfactory claim service, the commission said.

Car Claim Rejection: How IDV works and what the rules say on timelines

The IDV is the maximum amount an insurer pays if a vehicle is stolen or declared a total loss. It is fixed when the policy is bought and is based on the vehicle’s market value less depreciation. Consumer fora have in several earlier cases treated the IDV as the benchmark in total-loss claims. In one decision, the National Consumer Disputes Redressal Commission directed Royal Sundaram General Insurance to pay the Rs 4.98 lakh IDV on a badly damaged car.

It set aside a surveyor’s assessment that had put the loss much lower. Separately, the Chandigarh state commission ordered New India Assurance to pay the full Rs 22 lakh IDV, with 9 per cent interest, Rs 1 lakh in compensation and Rs 33,000 in costs. It found the company had made a claimant sign an affidavit agreeing to a lower settlement, which it called an unfair trade practice.

Courts have also drawn limits. In a 2023 ruling involving a BMW owner, the Supreme Court held that an insured cannot claim more than the policy terms provide, including a replacement car where the policy gives the insurer that choice. The Delhi ruling does not depart from this principle. It deals with an insurer trying to reopen a value it had already accepted and charged premium on.

Claim handling is also governed by regulatory timelines. Under the framework issued by the insurance regulator, a surveyor is to be appointed within 24 to 72 hours of a claim being reported. The survey report is due within about 15 to 30 days, depending on the provision. The insurer must then either settle the claim or give written reasons for rejecting it, generally within 30 days of receiving the last necessary document. Some insurers’ published service standards allow up to 45 days where an investigation is conducted. In this case the claim, reported in early 2021, was still unresolved when the insurer rejected it, and a consumer commission has now ruled on it years later.

Car Claim Rejection: Where policyholders can seek help

For consumer grievances, policyholders can contact the helpline of their state. The Delhi number is 1800-11-4000. The National Consumer Helpline can be reached at 1915.

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