Insurance gives peace
of mind, by protecting the property and providing financial support at the time
of loss or damage. The primary criterion for taking out insurance is ‘insurable
interest’ – right to insure / take out policy.
Ownership casts a right to protect the property though not the only
thing. A person or entity has an
insurable interest in an item, event or action when the damage or loss of the
object would cause a financial loss or other hardships. Insurable interest is
an essential requirement for issuing an insurance policy which makes the
contract of insurance – valid, legal and right. In Motor Insurance, Insurers check the RC of
the book to ensure that policy is taken by the individual / entity that owns
the vehicle. It is a requirement that
‘insurable interest’ should exist throughout the policy period, i.e., at the
inception / taking out the policy as also at the time of claim.
Ownership may not
require a lengthy explanation – it is the state or fact of exclusive
rights and control over property, which may be an object, land/real estate or
intellectual property. Ownership involves multiple rights, collectively
referred to as title, which may be separated and held by different parties.The
process and mechanics of ownership are fairly complex: one can gain, transfer,
and lose ownership of property in a number of ways. To acquire property one can
purchase it with money, trade it for other property, win it in a bet, receive
it as a gift, inherit it, find it, receive it as damages, earn it by doing work
or performing services, make it, or homestead it. Ownership is self-propagating
in that the owner of any property will also own the economic benefits of that
property.
Willing or voluntary transfer of
property could be for consideration or by gift or by will. A Gift Deed is a legal document that
describes voluntary transfer of gift from donor (owner of property) to donee
(receiver of gift) without any exchange of money. The donor must be solvent and
should not use this tool for tax evasion and illegal gains.
Motor Insurance is a contract between the policy
holder (invariably the owner of the vehicle) and the Insurer. Vehicles like any other property are sold and
ownership gets transferred. By rule,
such transfers need to be intimated and recorded with Road Transport
authorities and Registration Certificate [RC] of the vehicle endorsed
suitably. All India Motor Tariff clearly
deals with transfer of insurance ~ primarily the transfer of insurance is not
automatic.
General regulation 17 reads :On
transfer of ownership, the
Liability Only cover, either under a Liability Only policy or under a Package
policy, is deemed to have been transferred
in favour of the person to whom
the motor vehicle is transferred with effect from the date of transfer.[this is to take protect the third party]..the transferee shall apply within fourteen days
from the date of transfer in writing under recorded delivery to the insurer who has insured the vehicle,
with the details of the registration of the vehicle, the date of transfer of
the vehicle, the previous owner of the vehicle and the number and date of the
insurance policy so that the insurer may make the necessary changes in his
record and issue fresh Certificate of
Insurance.
In case of Package Policies, transfer of the “Own
Damage” section of the policy in favour of the transferee, shall be made by the
insurer only on receipt of a specific request from the transferee along with
consent of the transferor. If the transferee is not entitled to the benefit of
the No Claim Bonus (NCB) shown on the policy, or is entitled to a lesser
percentage of NCB than that existing in the policy, recovery of the difference
between the transferee’s entitlement, if any, and that shown on the policy
shall be made before effecting the transfer.A fresh Proposal Form duly completed
is to be obtained from the transferee in respect of both Liability Only and Package
Policies.Transfer of Package Policy in the name of the transferee can be done
only on getting acceptable evidence of sale and a fresh proposal form duly
filled and signed.
Thus categorically, transfer of
insurance (own damage portion) is not automatic – Insurer has the right to
revalidate the contract (can deny the cover also) – however, in the event of the death of the sole insured, policy coverage will not immediately lapse
but will remain valid for a period of three months from the date of the
death of insured or until the expiry of this policy (whichever is
earlier).
With this lengthy
background read this interesting decision of National Consumer Disputes
Redressal Commission, New Delhi. Insurers
filed application seeking condonation of delay of 136 days – Forum condoned
delay in revision petition subjecting it to deposit of Rs.20000/- as cost.
The parents of
Respondent 2 purchased a vehicle in the name of R1 for gifting the same in the
marriage. The vehicle was duly insured
with the petitioner. On 13.3.2012,
vehicle met with an accident, surveyor assessed it to be a total loss. Thereafter, the marriage was dissolved and
vehicle returned to complainant no. 2.
The claim was not paid and a case was filed before Dist Forum as a
consumer complaint. Insurer resisted on
the grounds that accident occurred on 19.1.2012 and not 13.3.2012; on the
material date complainants did not have insurable interest as vehicle had been
sold (C1 to C2) on 9.3.2012.
The Dist. Forum
allowed the complaint, Insurer approached State Commission by way of appeal
which was dismissed and hence appeal before National Commission.
The order of State
Commission tookt he date of accident to be 13.3.2012; affidavit sworn by
complainant no.1 revealed that vehicle had already been sold by him to C2 – the
said affidavit was executed on 9.3.12 and hence vehicle obviously was sold on
or before that date. C1 had no insurable
interest on the date of accident – he had also confirmed to have received sale
proceeds and delivered possession. C2
(the lady) had got the vehicle transferred in her name at the date of accident
– but insurance transfer had not been effected and insurance still stood in the
name of C1. The forum decided that as
no transfer of insurance had been effected in the name of C2 or a fresh
insurance obtained, there was no valid contract between the owner and the
Insurer. The Forum drew reference to
Apex court decree in Complete Insulations P Ltd Vs New India which cited Sec
157 of MV Act.
The Forum concluded
that the insurance claim for damage to vehicle was not payable either to
complainant no. 1 or no.2. It was not
payable to C1 as he did not have insurable interest and C2 because there was no
contract of insurance between her and the petitioner (Insurer) on the material
date. The consumer complaint was
dismissed with no order as to costs.
Interesting .. and
there are learning for all connected with insurance
With regards – S. Sampathkumar
Case citation : RP 3373/2018 against first
appeal of 545/2017 of Punjab SCDRC
No comments:
Post a Comment