Things to learn from car insurance case studies

The only person smarter than the one who learns from his/her own mistakes is the one who learns from the mistakes of others. The following case studies will highlight 3 such mistakes, and tell you how to avoid making them.

Things to learn from car insurance case studies

Laws in India make it mandatory for vehicles to be insured before they are driven. The new Road Transport and Safety Bill, 2014 proposed to raise the fine for driving a non-insured car from Rs 10,000 to Rs 75,000. However, it is not for the fear of the law that you must get your vehicle insured. 

Getting an insurance policy for your car is protects your life, money, and any third party. A car is an expensive investment that always lasts at least a couple of years. It goes without saying that thorough research is needed to buy the right policy for your car. 

However, it doesn’t stop there. There’s also the question of claiming for insurance. Though it’s usually fairly easy, there have been certain instances in the past when claimants have faced problems with their insurers. To ensure you don’t face similar problems, we have summarised the key learnings from them for you to understand and keep in mind while claiming insurance.

1) Third party compensation in case of an invalid license

What happened?

On 23 May, 1998, a man named Sivanayaitha Perumal, while driving a van hit a bicycle rider called Charles, who succumbed to injuries from the accident. Charles’ wife claimed compensation under the part of vehicle’s insurance that covers third parties. The matter went to court which decided that since Sivanayaitha Perumal was driving a Light Motor Vehicle (LMV) as a commercial vehicle, while holding a LMV licence for Non Transport (NT) , the insurer was not liable to compensate the deceased’s kin. Instead, the court made the vehicle’s owner liable to pay the compensation amount to the victim’s family.

What can you learn?

If the policy has recorded your vehicle to be for personal use, using it as a commercial vehicle without the knowledge of the insurer will get your insurance claim rejected. Insurance companies do not offer the insured amount if the accident takes place while the car is being driven for a purpose other than the one specified in the policy. 

Related: Just bought a new car? Here’s what you need to do next

2) In case of pre-owned cars

What happened?

In 2012, the UT Consumer Redressal Commission upheld an insurance agency’s decision to not pay the claim amount to Rajinder Kaur, a Chandigarh resident. The claimant had sold her car to Sunil Kumar but not transferred the registration and insurance in his name. The car caught fire and Mrs Kaur claimed the insurance amount from the company. However, the commission held that the agency was not liable to pay for damages as the car’s insurance was not transferred to the new owner Sunil Kumar at the time of the mishap.

What can you learn?

If you are selling your car, make sure that you also transfer the registration and insurance in the name of the person you are selling your car to. If you are planning to buy a pre-owned car, tell all your prospective sellers that you won’t buy the car unless they transfer the registration and insurance also in your name.

Related: Things to keep in mind when buying a used car

3) Car stolen from a parking lot

What happened? 

In June 2009, the Delhi State Consumer Commission directed an insurance agency to pay a man called Mohd. Ibrahim Rs 6.09 Lakhs, the complete value for his Honda City that was stolen from a hospital’s parking lot. The commission held that in case of theft, the insurance company cannot reduce the claim amount citing depreciation as a reason, since the loss incurred by the owner is on the complete value of the car. It also refuted the insurer’s argument that the hospital from whose parking the car was stolen was liable to pay the compensation.

What can you learn?

If your car is ever stolen, ask the insurance company to pay you the entire value (IDV) of the car. Also, if the car is stolen from a third party’s parking lot, don’t let your insurer let you believe that the third party should compensate you since the theft took place from its premises.

A lot of cases filed by people in consumer courts are against their insurers. Despite serious concern shown by a consumer forum in Delhi last year, insurance claims invariably get delayed for a host of reasons. It is therefore necessary that you understand all the nitty gritty of the entire process of motor insurance. 

A lot of things can be learned by reading and understanding the policy documents of various insurance companies. Apart from that, there is always a lot to learn from others’ experiences. So, keep your eyes and ears open and try to learn whenever you come across such cases, the way we tried to disseminate key learnings from the three case studies above. 
After all, “The only person smarter than the one who learns from his/her own mistakes is the one who learns from the mistakes of others.”


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