What You Need to Know About Insurance


Having Insurance is an important way of providing future financial security for ourselves and our families. However, many of us find this field intimidating and confusing. To ensure that we get our rightful dues as consumers, it is important for us to have some knowledge about basic concepts such as what exactly is Insurance, who is a Consumer, what is meant by a Survey, etc.


Consumer: As the word connotes the Consumer is one who consumes either a product or services.  The Consumer Protection Act, 1986 (C P Act) was enacted with the purpose to promote and protect the Rights of Consumers including the right to seek redressal against unfair trade practice and/or unscrupulous exploitation and to provide speedy and simple redressal to consumer disputes.To that effect, a quasi-judicial machinery has been set up at District, State and National levels known as The District Forum, The State Commission and The National Commission.


The word ‘Consumer’is defined under Section 2 (d) of the C.P. Act as a ‘person’ who buys any goods for consideration for self consumption and not for resale or hires/avails any services for consideration. The said provision was amended effective from 15th March 2003, whereby the services availed for any “commercial purpose”was excluded from the ambit of C.P. Act.


The National Commission in a land mark judgement in the case of Harsolia Motors V/s National Insurance Co. Ltd – I (2005) C.P.J. 27 (NC) took the view that the insurance is not obtained by the Consumer for generating profit (even in cases where consumer may be a business entity),but to protect the assets and for indemnification of actual loss and therefore, the Consumer Protection Act would have jurisdiction over the dispute.


The word “Service” has also been defined U/S 2 (O) of C P Act to mean service of any description including banking, financing, insurance, housing construction etc.


It is of common knowledge that the Tribunals known as District Consumer Forum, State Consumer Dispute Redressal Commission (State Forum) and National Consumer Dispute Redressal Commission (National Forum) have been dealing with numerous complaints against the service sector.


It is also an open secret that Forums are receiving maximum number of complaints against builders and /or developers and/or Insurance companies so much so, that the pendency of cases have gone up despite faster disposal without any rigmaroles  of procedural law and /or niceties of Evidence Act. The Forum follows the fundamental principles of Natural Justice, though the same cannot be a ground U/S 13(3) of the Act for challenging the procedure adopted by the Forum u/s 13(1) & (2).


Insurance: Broadly speaking the Insurance is divided in 3 categories:

a) Personal Line

b) Commercial Line relating to General Insurance

c) Life Insurance.


As far as Personal Line Insurance is concerned viz. Mediclaim, Insurance and Life Insurance are examples of the same. It is of common knowledge that the dispute arises mainly on the question of pre-existence of disease at the time of proposal and therefore it is imperative for the Insured to make sure that he should take efforts to fill in the proposal form, and not leave the same to the agent.


Jewellers Block Policy, Fire Policy, Marine/ Transit Policy are the examples of Commercial Line insurance.  It is advisable for the consumer to know exactly what has been covered and not covered.Thus special attention has to be paid as to nature and extent of cover granted under the policy


Survey:  It is mandatory for the Insurance company to have assessment of loss through IRDA approved Surveyor U/S 64 UM of Insurance Act. The Consumer must interact with the Surveyor as far as possible and seek survey report which is obligatory to be furnished.


Settlement of Claim: It is of common knowledge that the Insurance company and / or Surveyors coerce and/or use undue influence by insisting execution of discharge voucher prior to actual payment, which though has been declared illegal by the Apex Court, but still the said practice continues.


The Consumer should insist for payment under protest and if not then immediately protest after receipt of settlement amount, in order to keep his right intact for the recovery of the balance amount deducted wrongfully.


In the nutshell the Consumer should be vigilant himself though he is adequately protected under Consumer Protection Act.


This article has been written by S. R. Singh, Advocate