Insurer penalised for unjust claim denial

CONSUMER PROTECTION

- JEHANGIR B GAI

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.