Paid Premium a Day Before Theft, Insurer Said No: Consumer Commission Orders Payout
Consumer Commission rules in favour of the policyholder, rejecting the insurer’s denial and directing it to release the claim amount.
Consumer Commission orders an insurer to pay a theft claim after the policyholder paid the premium just a day before the vehicle was stolen.
NEW DELHI – A district consumer commission in Punjab has directed a general insurance company to pay Rs 3.5 lakh, with 9% interest and Rs 25,000 in compensation, to a Hoshiarpur man whose Mahindra Bolero pickup was stolen.
The insurer had refused the claim because the policy document carried a later issue date than the theft. The commission ruled that the premium had already been paid before the vehicle disappeared, so the insurer could not use the paperwork timing to avoid liability.
Consumer Commission: How the Bolero Theft Claim Was Rejected
Jatinder Kumar owned a Bolero pickup financed through a non-banking finance company. He took a comprehensive policy for September 8, 2021 to September 7, 2022, with an insured declared value (IDV) of Rs 3.5 lakh and a premium of Rs 21,103. The vehicle was stolen from outside his house on the night of September 7-8, 2021. An FIR was registered at Sadar police station in Hoshiarpur on September 8, the police could not trace the vehicle, and the court later accepted their untraced report.
Kumar then filed a claim. He said the insurer told him verbally that it was rejected because he reported the theft 21 days late, and that he never received anything in writing. The insurer’s repudiation letter, dated February 17, 2022, gave a different reason. It alleged deliberate and wilful misrepresentation about the date of theft and the cause of loss. Kumar approached the consumer commission, alleging deficiency in service and unfair trade practice. He named the finance company only as a necessary party and sought no relief against it.
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Consumer Commission: Why the Insurer’s Defence Failed Before the Commission
Before the commission, the insurer took a new position. It argued that the theft happened around 2 am on September 8, while the policy began at 1.58 pm that day, so the vehicle was uninsured at the time. The bench of president Naveen Puri and member Harvimal Dogra noted that this argument did not appear in the repudiation letter. It also found no evidence of any misrepresentation, and noted that the FIR was registered on the day of the theft. It set aside the repudiation.
On the new argument, the bench relied on Supreme Court rulings in Saurashtra Chemicals v. National Insurance Co. and JSK Industries v. Oriental Insurance Co. The apex court has held that an insurer cannot defend a claim on grounds beyond those stated in its repudiation letter. Saurashtra Chemicals concerned an insurer that had not raised delay in intimation in its rejection letter and could not raise it later before the consumer forum. In JSK Industries, the Supreme Court held that the National Commission had gone beyond the insurer’s stated ground, applying the earlier ruling.
The commission also examined when the premium was actually paid. Anil Kumar Patial, branch manager of the finance company, testified that Kumar completed the formalities on September 6, 2021, and that the vehicle was physically inspected on September 7. He said the premium was collected in cash that day and the policy was then punched with the insurer. The finance company’s file, produced as evidence, held photographs and time-stamped inspection records. The commission concluded from this that the premium was paid before the theft.
It also noted that the finance company was listed as an intermediary on the policy and that the two companies are sister concerns. It held that the next-day issuance came from dealings between them, and that the insurer produced no evidence that it received the premium after the theft.
Consumer Commission: What the Supreme Court Has Said on Premium Timing and Policy Dates
The commission relied on National Insurance Co. v. Maya Devi, a Supreme Court ruling of September 2, 2024. That judgment held that coverage in a motor accident claim begins from the day the insurer receives the premium. In that case, the premium was paid before the accident even though the policy was issued later because of internal procedural delays, and the court rejected the insurer’s fraud allegation. The court also noted that where a policy document is issued afterwards because of an internal procedure, an accident in the interim does not defeat the claim.
The commission did not accept the insurer’s reliance on Reliance Life Insurance v. Jaya Wadhwani, a 2024 Supreme Court ruling. That judgment held that the date of issuance of the policy is relevant, rather than the date of the proposal or of the receipt. The commission noted that it involved a life policy where the premium was a cheque not yet realised, whereas Kumar paid in cash. The Supreme Court itself drew that distinction. It observed that where the premium is paid in cash, the policy could be issued immediately, while merely tendering a cheque is not enough until it is encashed.
Section 64VB of the Insurance Act, 1938 is the underlying statutory rule on when cover starts. It provides that an insurer cannot assume a risk until the premium is received or guaranteed. Consumer fora have also dealt with claims rejected over delayed intimation in theft cases. The National Commission has held that a delay in informing the insurer does not invalidate a theft claim if the insured promptly reported the incident to the police.
With the repudiation set aside, the insurer must pay the Rs 3.5 lakh IDV along with 9% interest and Rs 25,000 compensation to the complainant.
