No insurance claim can be made without proper ownership papers

People often tend to be lax in their paper work. When a pre-ow ned or second-hand vehicle is purchased, the change in ownership has to be registered with the RTO in time. If this is not done, and the vehicle gets stolen or damaged, neither the seller nor the buyer can claim an insurance.

Case Study: Shamsher Singh owned a Tata 408 Trailer vehicle. It was insured with Oriental Insurance for the period August 12, 2010 to August 11, 2011.On December 27, 2010 Singh executed an irrevocable power of attorney recording that he was transferring his right to the vehicle along with the transport permits in favour of Rakesh Kumar from whom he had received valuable consideration in full and final satisfaction.

The vehicle met with an accident on January 26, 2011. The insurance company was intimated, which appointed a surveyor to assess the loss. The quotation for the repairs was for Rs 4,34,469, but the surveyor assessed the loss at Rs 3,05,000. However, the claim was rejected on the ground that Singh ceased to have any insurable interest in the vehicle as it had been sold.Also, the insurance company had not been intimated about the execution of the power of attorney for sale of the vehicle with the transport permit.

The repudiation was challenged by filing a consumer complaint. The insurance company defended stating that the claim was not payable as the vehicle had been sold. revision petition.

The National Commission The district forum directed the insurance company to settle the claim. The order was challenged before the Punjab State Commission, which dismissed the insurance company’s appeal. Oriental Insurance again challenged the orders through a observed that whether Singh had any insurable interest in the vehicle which met with an accident, would have to be determined on the basis of the conduct of the parties, viz. Shamsher Singh and Rakesh Kumar, to ascertain their real intention.The commission considered the wording of the power of attorney which showed that it was irrevocable, full consideration had been paid, and Singh had given up his entire right in favour of Rakesh Kumar.

The commission also observed that because the transfer has not been recorded in the official records of the RTO it does not alter the fact that the vehicle has been sold. The commission concluded that Singh had ceased to have any insurable interest in the vehicle . By its order of July 26, delivered by Justice V K Jain, the National Commission allowed the insurance company’s revision, set aside the orders of the district forum and the state commission, and held that the claim had rightly been repudiated.

Impact: If a vehicle is not transferred within the time provided under the Motor Vehicles Act, the insurance company is not liable to pay any claim for damage or theft of a vehicle.

 

Source- Times of India

Date- 8th August 2016

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