The Punjab State Consumer Disputes Redressal Commission has partly allowed an appeal filed by a truck owner, Baldev Singh Bhatti, against United India Insurance Company Limited. The appeal was filed after the District Consumer Disputes Redressal Commission, Malerkotla, dismissed the complaint. The truck owner had purchased a Tata Prima LX 3125 K8X4 BS-IV truck, which was insured for an insured declared value of Rs. 35,00,000 under a comprehensive policy. On October 2, 2020, the vehicle collided with another truck, causing significant damage. The claim was registered with the insurer, but it was declared as “No Claim” due to overloading.
The State Commission, comprising Hon’ble Mrs. Justice Daya Chaudhary and Ms. Simarjot Kaur, reviewed the pleadings and documents and referred to the Top Court’s ruling in Ashok Kumar v. New India Assurance Co. Ltd. The Court had reiterated the principle that in cases of overloading, insurance claims cannot be repudiated entirely but must be settled on a non-standard basis at 75% of the admissible claim. Applying this ratio, the State Commission held that United India Insurance had erred in repudiating the claim outright.
The Commission directed the insurer to settle the claim on a non-standard basis by paying 75% of the assessed loss, which was Rs. 5,15,000 as recommended by the surveyor. The appeal was thus partly allowed, with the order of the District Commission set aside. The ruling reaffirms that insurers cannot reject claims outright merely on the ground of overloading if the accident itself is unrelated to the alleged breach.
The truck owner had argued that the vehicle was carrying only 300 CFT of goods, which was within the permissible limit, and that the insurer had arbitrarily repudiated the claim. The insurer, however, maintained that the truck carried 500 CFT of material and alleged that the complainant’s documents were forged. The State Commission noted that the allegation of overloading could not be brushed aside, but the correct course in law was to restrict liability to 75% of the assessed damages.
The judgment is significant as it clarifies the law on insurance claims in cases of overloading. The Top Court’s ruling in Ashok Kumar v. New India Assurance Co. Ltd. has been reaffirmed, which held that insurance claims cannot be repudiated entirely in cases of overloading, but must be settled on a non-standard basis at 75% of the admissible claim. The judgment will have implications for insurance companies and policyholders, and will provide guidance on how to handle claims in cases of overloading.