The National Commission dismissed the argument that only the horse was covered and not the trailer, calling it ‘palpably amusing and fantastic’
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The insurer also faulted the insured for not following its instructions to meet certain persons regarding the incident. | File Image
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Concrete Udyog, a limited company, owned a truck for use as a public carrier. It was insured by National Insurance under a Public Carrier Package Insurance Policy valid from May 25, 2015, to May 24, 2016. The insured declared value (IDV) recorded in the policy was ₹23,51,250.
On April 16, 2016, while transporting goods to Diwanganj, the truck caught fire after an electric wire fell on it, resulting in total loss. The fire brigade and police were immediately informed, and the insured promptly notified the insurer. The appointed surveyor submitted his final report on August 6, 2016.
On March 21, 2017, the insurer wrote to the insured, stating that the policy covered only the “horse” or front cabin of the vehicle, not the trailer. The insurer contended that the attachment of a trailer was never disclosed, even though it constituted a material change in risk. It alleged that the insured had violated the doctrine of utmost good faith and breached the policy conditions.
The insured contested this stand, pointing out that the horse could not operate without the trailer and emphasising that the truck and trailer function as a single unit. The insured further requested the insurer to specify which terms and conditions of the policy had been breached.
Despite providing all documents, clarifications to queries, and persistent follow-ups, the claim remained unsettled. Consequently, the insured filed a complaint before the Uttar Pradesh State Consumer Disputes Redressal Commission alleging deficiency in service.
The insurer contested the case, maintaining that the attachment of a trailer was never disclosed. It also claimed that the electric company, whose wire had fallen on the truck, had not been informed. The insurer also faulted the insured for not following its instructions to meet certain persons regarding the incident.
The state commission overruled all objections, observing that there was neither suppression of facts nor alteration of risk. It noted that the policy did not require intimation to the electric company. It held that a police complaint was properly lodged, and there was no need to ask the insured to meet other persons regarding the incident.
The state commission concluded that the insured had complied with all policy obligations and that refusal to settle the claim amounted to deficiency in service. It indicted the insurer for acting in bad faith and unjustifiably withholding the claim. The commission ordered payment of the claim based on the insured declared value (IDV), with 10 per cent interest from April 18, 2016, the date of loss intimation. It also awarded ₹4 lakh as compensation and damages for delay, manipulation, harassment and mental tension, along with ₹50,000 as litigation costs.
The insurer appealed against the order, arguing that the judgement was erroneous and the compensation excessive. The National Consumer Disputes Redressal Commission (NCDRC) dismissed the argument that only the horse was covered and not the trailer, calling it “palpably amusing and fantastic” as such coverage would have no commercial utility. It modified the order by allowing deductions for salvage and the excess clause, and ordered payment of the balance amount of ₹20,49,750 with 9 per cent interest from September 6, 2016. While it modified the compensation, it allowed special damages of ₹2 lakh for acting in bad faith and causing harassment, and the litigation costs of ₹50,000.
The writer is a consumer activist.
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