The Delhi State Commission, led by Justice Sangita Dhingra Sehgal, ruled that an insurer cannot reject a claim solely on the basis of late intimation by the insured, as this constitutes a deficiency in service. The case involved a poor villager who purchased a tractor for agricultural purposes, financed by the State Bank of India and insured by the New India Assurance Co. Ltd. Due to a drought, the farmer faced financial difficulties and was forced to move to Delhi, where his tractor was stolen. Despite informing the State Bank and the insurer of the theft and submitting necessary documents, the insurer failed to take any action.
The complainant filed a writ petition, which was dismissed, and subsequently filed a complaint with the District Consumer Commission, which was also dismissed on technical grounds. Undeterred, the complainant filed an appeal with the State Commission of Delhi. The insurer argued that the claims were baseless and frivolous, but the State Commission disagreed, ruling that the District Commission had erred in dismissing the case due to the delayed intimation.
The State Commission observed that while there was a delay in informing both the police and insurer, the occurrence of theft was undisputed, supported by the police’s untraced report. The Commission held that the claim should not be entirely repudiated and awarded the complainant the insurance claim on a non-standard basis, directing the insurer to pay 50% of the Insured Declared Value. The ruling serves as a reminder that insurers cannot use technicalities to avoid paying legitimate claims and that consumers have a right to receive compensation for losses covered under their policies.