Imagine losing your brand new vehicle on the very day of purchase! That’s exactly what happened to Sanjeev Kumar. And as if that was not bad enough, he had to wage a long legal battle with the insurance company for indemnification of his loss.

On July 25, 2004, Sanjeev Kumar bought a Mahindra Max for Rs 4,11,797 from United Automobiles in Allahabad. He also took out an insurance policy from United India Insurance. Since the dealer told him that the moment the vehicle leaves the showroom, its value gets reduced by five per cent, he took insurance cover for Rs 3,89,473.

He then drove the vehicle to Buxar where he lived and parked it in front of his house. The next morning, however, to his utter shock and dismay, he found his vehicle missing. He lodged a complaint with the police and eventually, filed a claim with the insurance company.

After eight months, the insurance company offered as “full and final” settlement only Rs 2,91,000 on the ground that his vehicle was not registered with the regional transport officer. This came as a second shock to Kumar.

How could he accept such a reduced sum for a brand new vehicle? And he had to repay the loan that he had taken from a bank to purchase the vehicle.

Fortunately for him, the National Consumer Disputes Redressal Commission held that the insurer was not justified in offering the settlement of the claim on a “non-standard” basis. It therefore directed the insurance company to pay the entire insured amount of Rs 3,89,473, along with 12 per cent interest calculated three months after the loss of the vehicle. It also awarded Rs 25,000 as litigation costs.

The National Commission pointed out that under Section 40 of the Motor Vehicles Act, every owner of the motor vehicle is required to get it registered by a registering authority in whose jurisdiction he is residing or the place of business where the vehicle is normally kept. In the present case, therefore, after purchase of the vehicle he took the vehicle to Buxar. Since that was a Sunday, he could not get the vehicle registered.

It was also not possible to obtain a temporary registration at the time of vehicle delivery because it was a Sunday. In these set of circumstances, the offer made by the insurance company on non-standard basis was not justified, the Commission said (Sanjeev Kumar vs the Branch Manager, United India Insurance, Revision Petition no. 309 of 2007).

Hopefully, orders such as these should bring about a positive outlook in the insurers vis-à-vis settlement of claims.