Consumer Commission Orders Compensation After Insurer Rejects Claim for Burnt BMW Left on Highway
You leave your punctured car on the roadside and in the morning it is found burnt. Should the insurer give a payout? In one such case, a man’s BMW developed a tyre puncture on the highway late at night. After locking the vehicle, he and his driver returned home in another vehicle. The next morning, the car was discovered completely gutted by fire. Although the vehicle was insured, the insurance company denied the claim.
What the case is about
The man reported that he left his BMW on the highway overnight after it suffered a puncture. The following morning, the vehicle was found burnt, and local police and the fire department documented the incident. The BMW had an Insured Declared Value (IDV) of Rs 70,00,000, and the owner paid an insurance premium of Rs 1,65,996. After the authorized dealer declared the vehicle a total loss, the insurance company registered the claim but stated that the settlement decision would be made by its managing director in Chennai. Despite follow-up communication, the insurer rejected the claim, leading to a prolonged legal dispute.
The insurance company argued that the claim was invalid because the vehicle was left unattended. The car owner subsequently approached the Consumer Commission for payment under the insurance policy. The Maharashtra State Consumer Disputes Redressal Commission ruled in favor of the car owner, ordering the insurer to pay the IDV along with interest, concluding a legal battle that lasted over a decade.
Why did the insurer reject the IDV claim?
The insurer claimed that the man violated several policy conditions. It alleged that he failed to promptly inform both the police and the insurance company in writing. Additionally, the insurer stated that he breached a condition by leaving the vehicle unattended without taking proper precautions. The company contended that the incident was merely a minor breakdown and not an accident, arguing that the owner should have remained with the BMW or moved it to a safer location.
The insurer also referenced the BMW’s previous insurance policies and the gap in coverage, assessing the vehicle’s value at Rs 59 lakh after accounting for depreciation.
Why did the consumer commission rule in favour of the car owner?
The commission found that the car owner did not violate the policy’s conditions. It clarified that the policy does not prohibit leaving a vehicle that has broken down but requires taking appropriate precautions to prevent further loss. Given the late hour, there were no repair facilities available, and the owner faced an unexpected situation. The commission noted that the vehicle was locked and left by the roadside, which was not the cause of the fire.
The commission dismissed the insurer’s valuation of the BMW and ruled that the insurance company could not independently reduce the vehicle’s value through depreciation during the claim settlement. It directed the insurer to pay Rs 70 lakh, the BMW’s IDV, along with 7% interest from the date of claim rejection, November 23, 2012, until the amount is realized. Additionally, the insurer was ordered to pay Rs 50,000 for mental agony and Rs 25,000 for litigation expenses.
According to Sarthak Prashar, Director at Grant Thornton Bharat, the Consumer Commission found the insurer’s rejection unjustified, stating that the policy did not impose an absolute prohibition on leaving a disabled vehicle unattended. The commission deemed the precautions taken by the car owner reasonable under the circumstances.
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