Insurance Claims Cannot Be Denied Over Incorrect Policy Details, Rules Jharkhand HC

The Jharkhand High Court recently delivered a judgment providing relief to the family of a victim of a road accident.

The case involved one Lakhichand Maraiya, a carpenter, who was killed in a road accident in June 2010. His wife and children filed a compensation claim with the Motor Accident Claims Tribunal (MACT). While the Tribunal passed a ruling in their favour in June 2016, ordering the insurer to pay approximately Rs 20.49 lakh to the family of Maraiya, the insurer challenged the same. It said that the policy number provided by the claimants (the victim’s family) was incorrect. This made the insurers absolved of any liability and compensation.

The matter reached the Jharkhand High Court, which recently passed a ruling in favour of the claimants.

The court ruled that insurance companies cannot reject claims simply because the claimant provided an incorrect policy number. According to Vedictum, Justice Sanjay Kumar Dwivedi said in his ruling: “Merely providing a wrong policy number by the claimants, the liability of the insurance company cannot be ruled out because the claimants are not supposed to know the exact policy number and they have gathered the same from somewhere and produced it before the learned Tribunal.”

The court added that the insurance company had not submitted any evidence demonstrating that the driver was driving rashly or was negligent at the time of the accident. Additionally, witness testimonies also confirmed the occurrence of the accident.

The court’s judgment in favour of the Tribunal’s ruling only reinforces the insurance regulator’s guidance for insurers to handle claims arising out of tragic circumstances in a reasonable and compassionate manner.

The Insurance Regulatory and Development Authority of India (Irdai) had in a circular in 2024 advised insurers that claims should not be rejected solely on procedural flaws in policy documents, but rather on actual claim-related data. This was to ensure that claimants were not denied compensation due to small mistakes that were beyond the knowledge or control of the claimants.