Insurance companies should pay the insured value of vehicles in case of theft and not the prevailing market value, a district consumer forum has ruled.

The ruling was given by the District Consumer Disputes Redressal Forum, Chennai (south), in a complaint against the New India Assurance Company limited, which had refused to pay the insured value of a stolen car but only paid the prevailing market value. Directing the insurance company to pay the insured amount, the forum ordered it to pay a compensation of Rs. 5,000 for deficiency in service.

"The contention of the New India Assurance that they had assessed the value of the car on the basis of its model and not on the basis of the insurance policy taken by the complainant, is contrary to the terms and conditions", the forum, headed by R. Aparna, held, while passing orders on a complaint filed by P. Vijayalakshmi of T Nagar.

According to the complainant, her car which was insured for Rs.1.32 lakh was stolen in July, 1999. She had informed the incident to the insurance company and submitted relevant documents and made the insurance claim. But the New India Assurance had refused to pay the insured value and paid only Rs.80,000, claiming that the car was an 18 year old one and hence it could not pay more

On perusal of the case. The forum said, "New lndia Assurance, having insured the vehicle for Rs.1.32 lakh knowing well that it can be valued only for a sum of Rs.80,000 has also charged higher premium accordingly. It is the duty of the insurance company to settle the claim for which the vehicle was insured."

(Courtesy : The Indian Express dated 3.3.2006)

April-June 2006