Insurer Ordered To Pay Full Vehicle Value After Accident Claim Remained Unsettled For Nine Years

A long delay in settling an insurance claim cannot be used against the policyholder later, the West Bengal State Consumer Disputes Redressal Commission (CDRC) has held while upholding an order against ICICI Lombard General Insurance Company.

The commission directed the insurer to pay the insured's declared value of a vehicle that was damaged in an accident in 2008, along with interest, compensation, and litigation costs. The case underlines an important point for motor insurance buyers: once an insurer has received the claim documents and completed its assessment, it cannot simply leave the claim pending indefinitely.

The vehicle owner, Kanchan Dutta, had insured the vehicle with ICICI Lombard. In August 2008, the vehicle met with an accident on National Highway 60 and was reportedly damaged beyond repair.

Dutta submitted a claim to the insurer and provided the documents required for processing it. The insurer also appointed a surveyor to inspect the vehicle. The surveyor assessed the damage at 100 per cent, according to the consumer commission’s findings.

However, the claim was neither paid nor formally rejected.

Claim Was Neither Settled Nor Rejected

For years, the policyholder did not receive a final decision from the insurer. After waiting for nearly nine years, Dutta sent a legal notice to the company in November 2017. When that did not lead to a settlement, he approached the District Consumer Disputes Redressal Forum in Paschim Medinipur in December 2017.

The district forum ruled in favour of the policyholder. It directed the insurer to pay Rs 3,07,800, which was the insured's declared value of the vehicle. It also awarded interest at nine per cent from the date the complaint was filed, Rs 1 lakh as compensation, and Rs 5,000 towards litigation costs.

The insurer was also directed to deposit Rs 10,000 in the state consumer welfare fund.

ICICI Lombard challenged the district forum’s decision before the West Bengal State CDRC. One of its main arguments was that the complaint had been filed several years after the accident and should be treated as time-barred.

The state commission, however, did not accept this contention.

Insurer Cannot Benefit From Its Own Delay

The commission noted that the insurer had a duty to either settle the claim or communicate a rejection within a reasonable period. Since the insurer had done neither, it could not rely on the passage of time to deny the policyholder relief.

The commission held that the delay was largely caused by the insurer’s failure to take a final decision on the claim.

It also took note of the fact that the insurer had appointed a surveyor after the accident. Yet, it did not produce the survey report before the consumer forum. The commission said that an adverse inference could be drawn against the insurer in such circumstances.

The insurer had also questioned a 14-day delay in filing the First Information Report (FIR) after the accident. But the commission found no merit in that argument and did not see it as sufficient to cast doubt on the accident itself.

The bench, comprising judicial member Rajes Guha Ray and member Santanu Saha, dismissed the insurer’s appeal and upheld the district forum’s order.

What Policyholders Can Learn From The Case

For motor insurance policyholders, the ruling highlights the importance of maintaining a clear paper trail after an accident. This includes copies of the policy, claim form, repair estimates, FIR, photographs, correspondence with the insurer, and survey-related documents.

A claim should not be allowed to remain in limbo without regular follow-up. Policyholders should seek written updates from the insurer and preserve every email, letter, and acknowledgement. Where there is no decision for an extended period, a written grievance with the insurer’s grievance redressal officer may be the next step.

If the issue remains unresolved, the policyholder can approach the insurance ombudsman or consumer commission, depending on the nature of the dispute and relief sought.

The case also shows that a delay by the policyholder may be viewed differently where the insurer itself has failed to settle or repudiate the claim despite having completed the assessment process.

FAQs

1. Can an insurer reject a motor insurance claim after keeping it pending for years?

An insurer cannot benefit from its own inaction. If it neither settles nor formally rejects a claim within a reasonable period, a consumer forum may treat the delay as a deficiency in service.

2. What should a policyholder do if a motor insurance claim remains unresolved?

Keep written records of claim papers, survey reports, emails, and reminders. Escalate the matter through the insurer’s grievance mechanism, and consider approaching the insurance ombudsman or consumer commission.

3. Does a delay in filing an FIR automatically lead to claim rejection?

Not necessarily. A delayed FIR may be examined along with the facts of the case, but it may not, by itself, disprove an accident or justify rejection of a genuine claim.