Case Study 22 - The insurance company cannot repudiate the claim in total that vehicle used for hire

This appeal has been filed challenging the judgment and order of the National Consumer Disputes Redressal Commission (hereinafter, `National Commission') which upheld the concurrent finding of the District and State Consumer Forums that the car at the time of the accident was being driven on hire and was outside the scope of the insurance policy. The appellant who is the original complainant had taken a comprehensive insurance policy in respect of his private car being No. WB-34C/1919 vides policy No.311701/3/99/7172 of 1999 and the complainant paid the insurance premium duly.
As per the complainant, United Bank of India's regional office is his tenant and many of its employees are known to him. One of its employees had approached the complainant to hand over the aforesaid vehicle for a few hours for urgent use by the employees of the Bank. The complainant handed the aforesaid vehicle by way of a good gesture and did not take any rent from the Bank in this regard. The vehicle met with
an accident during the subsistence of the policy. The complainant had lodged a claim before the respondent but it refused to allow the claim inter alia on the ground that the vehicle was given on hire and as per the policy terms such use was not permitted and the insured was not entitled to any compensation for such unauthorised use

The Judgement
It is not in dispute that the appellant has taken a comprehensive insurance policy nor is it in dispute that the accident took place during the subsistence of the policy. The policy was, therefore, valid on the date of
the accident. What is disputed by the insurance company is that the vehicle was not used for personal use but was used by way of being hired, though no payment for hiring charges was proved. However, according to the insurance company, by using the vehicle on hire, the appellant had violated the terms of the insurance policy and on that basis the insurance company was within its right to repudiate the claim.
In the case the entire stand of the insurance company is that claimant has used the vehicle for hire and in the course of that there has been an accident. Following the guidelines in various other similar
judgements, the Court is of the opinion that the insurance company cannot repudiate the claim in total. “For the reasons stated, we cannot affirm the order of the forum below. We direct the respondent insurance
company to pay a consolidated sum of Rs.2,50,000/- even though compensation claimed is Rs.5,00,000/-. In the facts and circumstances of this case, the said sum is to be paid to the appellant by the insurance company without any interest within a period of six weeks from date. However, if the insurance company delays the aforesaid payment beyond six weeks, then this amount will carry an interest of 9% from the date of the expiry of the period of six weeks till the date of actual payment.”