Skip to main content

Motor insurance

TRANSFER formalities at the regional transport office on purchase/sale of vehicles can take time. While the process is pending, the insurance policy continues in the name of the seller. What happens if the vehicle meets with an accident or is stolen during this period? If the buyer lodges a claim, the insurer refuses to indemnify him as the policy is not in his name. If the seller lodges the claim on behalf of the buyer, the insurer contends once the vehicle is sold, he ceases to have an insurable interest, and, hence, is not entitled to lodge aclaim. Thus, though the premium has been collected, the claim is paid neither to the seller nor the buyer. Is this permissible? Narayan Singh purchased asecond-hand Maruti van, insured for `1,40,000 by the original owner. Within five days, it met with an accident while Singh and his family were travelling from Varanasi to Muzaffarpur. The vehicle was totally damaged. As the claim was not settled, Singh filed a complaint before the Muzaffarpur District Forum, which ruled in his favour and directed the company to reimburse 1,40,000 with an eight-per cent interest per annum, plus `5,000 as compensation and cost.

The insurer appealed to the Bihar State Commission, which set aside the forum's order and dismissed the complaint, stating the Muzaffarpur District Forum did not have the territorial jurisdiction and, also, because the policy had not been transferred in Singh's favour.

Singh then approached the National Commission. With regard to policy transfer, the commission said the view taken by the State Commission was erroneous and could not be justified in view of Section 157 of the Motor Vehicles Act, which provides that an application for transfer has to be made within 14 days of the vehicle's purchase. In this case, the accident had occurred within five days, much before the expiry of this period. Also, India Motor Tariff Regulations say that upon a vehicle's transfer, the benefits under the policy would automatically accrue to the new owner. So, the rejection was unjustified.

Regarding the objection to the territorial jurisdiction of the Muzaffarpur District Forum, the commission observed that Singh resided at Muzaffarpur and was using the vehicle there. Even as the accident took place in Patna district, the insurance company had a branch at Muzaffarpur. Hence, the commission ruled the Muzaffarpur District Forum could entertain the dispute.

Accordingly, it set aside the State Commission's order and upheld the decision given by the District Forum in Singh's favour. It also increased the rate of interest from 8 to 12 per cent a year.

The commission came down heavily on the insurance company for adopting an unjustified stand and suppressing the relevant India Motor Tariff Regulation in several cases. As a deterrent and penal measure, it levied a punitive cost of `1lakh on the insurer, payable to the Consumer Legal Aid Account. The commission warned insurers to be careful about not taking a stand contrary to the regulations framed by the India Motor Tariff and the Insurance Regulatory Development Authority. The order copy was also sent to the latter's chairman . [Shri Narayan Singh v/s New India Assurance – IV (2007) CPJ 289 (NC)].

Some companies continue rejecting similar claims. Recently, a consumer complaint was filed against Bajaj Allianz General Insurance for ignoring such a claim, despite the judgement having been brought to its notice
 

Popular posts from this blog

Retirement planning from a long-term perspective

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds     `HOW green was my valley'. This title comes from a movie I had watched many years ago. A little boy's journey into adulthood and the story of a Welsh valley's turn of-the-century descent from pristine paradise to despoiled coal mining.   I thought of the title because it is comparatively reflective of a person's life ­ the glorious years when he is earning and the sun down years when he is not having his regular job and, hence, his living standards comes down. The reason is a combination of things. Inflation of food items, transport, increase in health related costs in the later years of life and increase in expenses in almost all basic amenities of life. In India, the social security system is almost non-existent. In some states, wherever it is available, the scales of benefits are extremely modest...
Read more

LIC's JEEVAN SHIKHAR

  LIC's Jeevan Shikhar is a participating, non-linked, saving cum protection single premium plan wherein the risk cover is ten times of Tabular Single Premium. The proposer will have an option to choose the Maturity Sum Assured. The premium payable shall depend on the chosen amount of Maturity Sum Assured and age at entry of the life assured. This plan also takes care of liquidity need through its loan facility. The plan will be open for sale for a maximum period of 120 days from the date of launch. 1.   BENEFITS   : a) Death Benefit: On death during first five policy years: Before the date of commencement of risk   :   Refund of Single Premium without interest. Single Premium mentioned above shall not include any extra amount if charged under the policy due to underwriting decision and taxes. After the date of commencement of risk   : "Sum Assured on Death" equal to 10 times the tabular single premium shall be payable. On death after completion of five policy years but b...
Read more

Investment Strategy - What is Sector Rotation Theory?

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   The economy goes through cycles : it expands for a few years and then contracts. Study of historical data suggests that different sectors tend to perform well on the stock markets during different stages of the economic cycle. While history never repeats itself exactly, some broad patterns tend to recur. Investors can take advantage of the sector rotation theory to move their money from those sectors that have seen their best times to those that are likely to do well in future.   The person who developed the sector rotation theory is Sam Stovall, chief investment strategist at Standard & Poor's. He developed this theory by studying data on economic cycles going as far back as 1854 provided by the National Bureau of Economic Research ( NBER ) of the US.   When trying to correlate stock-market perfor...
Read more

Rajiv Gandhi Equity Savings Scheme (RGESS) set for launch this week

The finance ministry is set to notify the Rajiv Gandhi Equity Savings Scheme ( RGESS ) this week.   Though Finance Minister PChidambaram had approved on September 21, the scheme announced in this year's Budget, and had said that the revenue department will notify the scheme and the Securities and Exchange Board of India ( Sebi ) would issue relevant circulars within two weeks, it is yet to become operational.   A senior finance ministry official said the revenue department was expected to notify the scheme any day now to attract retail investors to the equity segment.   He added that Sebi was not required to issue any circular for the operationalisation of the scheme and that after the issuance of the revenue department's notification, investors would be able to avail of the benefits of the scheme.   The official accepted that implementation of the scheme had been delayed due to the deliberations on inclusion of mutual funds ( MF ) in it.   ...
Read more

CNX Midcap vs BNP Paribas Midcap Fund

BNP Paribas Midcap Fund - Invest Online   Te  performance of BNP Paribas Midcap Fund  – which has across the last 3 years generated superior returns over the benchmark – especially when the markets have gone down the fund has handsomely outperformed the benchmark preserving the capital of the investors. The fund has been able to do this only due to the superior stock selection process ( BMV approach) that is diligently followed at BNPP.   Highlights of BNP Paribas Mid Cap Fund:   Investment Objective : BNP Paribas Mid Cap Fund gives an investor exposure to invest in the various quality midcap stocks. The fund also has some exposure to large as well as small cap stocks.   Investment Approach : BMV ( Quality and scalability of Business →Good Management → Reasonable Valuation ) with Bottom-up stock picking.   Most of the investors are way happier if the fund that they have invested in is a significant Outperformer in tough times than in Good ti...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now