Vehicle insurance policy doesn’t lapse even if not transferred in Buyers name

July 18, 2022

Sheela had purchased a second-hand motor cycle for her son from Mahesh. The insurance policy for this vehicle had been obtained by Mahesh from Liberty General Insurance, and was valid from September 27, 2016 to September 26, 2017.
The registration certificate for the vehicle was transferred to Sheela on April 27, 2017, but the insurance policy continued in Mahesh’s name.

The vehicle was stolen on June 2, 2017. An FIR was lodged with the police the next day, while the insurer was intimated on June 8, 2017. Sheela’s claim was rejected on the ground that the policy was not transferred to her name within 14 days of transfer of the vehicle.

Sheela, along with Mahesh, filed a joint complaint before the District Forum seeking a direction to settle the claim. The insurer argued that Mahesh had no right to claim the loss as he had no insurance interest after having sold the vehicle, while Sheela was not entitled to make a claim as the policy had not been transferred to her name.

The Forum held that the insured value of Rs.1,37,824 would have to be paid along with 12% interest from the date of theft till the date of payment.
Additionally, Rs.10,000 was awarded as damages and Rs.5,000 towards litigation costs. The insurer challenged the order, but its appeal was dismissed by the Karnataka State Commission.

The insurer then filed a revision petition. The National Commission observed that were no evidence to show that the policy would lapse if was not transferred to the purchaser within 14 days of transfer of the registration certificate.

It observed that after accepting the premium and covering the risk, the insurer’s argument that neither the original owner nor the purchaser were entitled to make a claim would an unacceptable and paradoxical.

Accordingly, by its order of June 3, 2022 delivered by Dinesh Singh and Justice Karuna Nand Bajpayee, the National Commission dismissed the revision and upheld the direction to settle Sheela’s claim.

-Jehangir Gai
The author is a consumer activist and has won the Govt. of India’s National Youth Award for Consumer Protection. His e-mail is jehangir.gai.columnist@outlook.in”

Article text & editorial credit: www.timesofindia.indiatimes.com

Tags: Be a Smart Consumer, Consumers

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