‘Insurance firms cannot reassess vehicle’s marker value’

July 12th, 2008 - 8:08 pm ICT by IANS  

New Delhi, July 12 (IANS) A consumer court has ruled that insurance companies cannot re-asses the market value of a vehicle after it is damaged in an accident or is stolen. “Once the insurance companies assessed the cost of the vehicle at the time of issuing the insurance policy and charge the corresponding premium, they cannot be allowed to re-assess the market value of the vehicle particularly in case of total loss,” Justice J.D. Kapoor, president of the Delhi State Consumer Disputes Redressal Commission, ruled Friday.

The commission directed Oriental Insurance to indemnify the loss to the tune of Rs.240,000 and to pay Rs.5,000 as compensation and Rs.1,000 as the cost of litigation to the claimant.

Kapoor added if the insurance companies are allowed to reopen the issue of re-assessing the market value which is normally assessed to the extent of two-third or sometimes half of the insurance value then the whole concept of charging corresponding premium and declaring the insurance value would lose its meaning and it would be of no relevance.

The commission has also criticised the practice of the insurance companies of not honouring the claim of the person to whom the vehicle has been sold on the plea that the insurable interests have not been transferred.

“I have come across a large number of cases where the claim of the owner as well as claim of the person who has purchased the vehicle has been repudiated.

“When original owner files the claim, the insurance company tells him that since he has already sold the vehicle he has no insurable interest. When the subsequent purchaser files the claim he is told that since the change of his name has not been effected in the registration certificate as well as the insurance policy, his insurable interests have not been transferred,” Kapoor said.

These observations were made in a case where the vehicle’s value was fixed at Rs.4,80,000.

Its new owner Mahajabi made the claim after the vehicle met with an accident. But her claim was rejected inspite of the surveyor’s report that there was total loss and also in spite of the fact that the insured was given the choice that he may dispose of the salvage value - assessed at Rs.240,000.

The insurance company rejected the claim mainly on the ground that the original owner did not give any authority to the prospective purchaser who filed the claim.

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