The Supreme Court has ruled that insurance companies cannot deny claims solely due to the non-renewal of a state permit if a valid national permit exists. The court clarified that if a vehicle catches fire within its registered state, the non-payment of authorization fees for a state permit does not invalidate the insurance claim.
Background of the Case
This case involved a truck owner from Bihar who filed a dispute against the National Insurance Company after his insurance claim was denied. The truck caught fire due to a short circuit on June 8, 2014, while in Bihar.
The insurance company rejected the claim, arguing that the truck’s state permit was not renewed after October 14, 2013. They contended that without a valid state permit, the national permit should also be considered invalid, making the insurance claim ineligible.
Decision by the State Consumer Commission
The truck owner filed a complaint with the State Consumer Disputes Redressal Commission, Bihar, which ruled in his favor. The Commission directed the insurance company to settle the claim on a non-standard basis within three months.
Decision by the National Consumer Commission
The insurance company challenged this ruling before the National Consumer Disputes Redressal Commission (NCDRC), which overturned the State Commission's decision. The NCDRC held that without a valid state permit, the insurance claim could not be processed.
The case reached the Supreme Court, where a bench of Justice B.V. Nagarathna and Justice Satish Chandra Sharma delivered a landmark judgment.
"The national permit was valid, and the vehicle was within its registered state. Therefore, the insurance company cannot deny the claim solely based on the absence of a renewed state permit." – Supreme Court
The court noted that the national permit was valid until October 13, 2017. Since the vehicle was in Bihar at the time of the incident, the owner was not required to pay an additional authorization fee for the state permit.
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Validity of National Permit – If a national permit is valid, the absence of a renewed state permit does not affect an insurance claim.
Insurance Company's Obligation – The insurance company had no legal grounds to reject the claim.
Support for Consumer Rights – The Supreme Court upheld the State Consumer Commission's decision and set aside the NCDRC's ruling.
9% Interest on Claim Amount – The court ordered the insurance company to process the claim and pay the insured amount within 60 days, along with 9% annual interest.
"A policyholder should not be made to wait for years to receive the insurance amount. Therefore, the insurance company must compensate the claimant with interest." – Supreme Court
