Many incidents have taken place where vehicle owners ran into financial losses after purchasing second-hand vehicles. These losses were mainly because their insurance claims were rejected.
Their insurance claims were rejected because while transferring the ownership of the vehicle, they failed to transfer the insurance policy papers on their name. This implied that there was no legal contract between the new owner of the second-hand vehicle and the vehicle insurance company. Hence, the insurance company wasn’t liable to pay for any of the damages in case the new owners raised a claim.
This problem continued for quite a long time with no proper solution. Until recently, our legal system came up with a workable solution. We all are aware of RC which stands for Registration Certificate. An RC provides evidence to the fact that your vehicle is registered with the RTO.
So the solution is that now, by simply transferring the RC from a vehicle owner to a buyer is adequate to transfer all the benefits to the buyer as per consumer court. These benefits include vehicle insurance.
Let’s look at two incidents where this new solution by the consumer court was actively applied.
The first incident was when the RC from a vehicle owner was transferred to a buyer but the insurance policy wasn’t transferred. In this case, the court ordered the respective insurance company to waive off an accident claim of 6 lakh rupees. The court also asked the respective vehicle insurer to pay Rs. 60,000 to the buyer as compensation.
Another incident is about a 25 year old man Abishek Das, residing in Mysore who bought a Hyundai Verna in Oct 2019 from Sheeba Robert. Abishek got the Registration Certificate reassigned to his name. He also arranged for transferring the vehicle insurance papers on his name within a period of 14 days. However, one of his acquaintances, driving the Verna on 12th October instigated a grave accident which led to repairing costs of more than 6 lakh rupees.
The car had its insurance policy from United India & it was active from 16th Jan 2019 to 15th Jan 2020. Also, it was under Sheeba Robert’s name. As per the norm, Abishek raised a claim to cover for the accident expenses. United India sent an examiner for the assessment of the damages sustained. However, after the entire investigation, the claim was turned down stating that there was no insurance contract between United India and Abishek Das. Hence, United India wasn’t liable to pay.
Abishek approached the District’s Redressal Commission that takes care of Consumer Disputes. On 7th Aug, he launched a complaint against United India. In the court, Abishek’s lawyer put forward the case but United India’s Bangalore representatives didn’t appear.
On the other hand, United India’s Chennai representatives, with the help of their attorney, answered the case & stated that it was a false complaint. As their counter, the stated that when the accident took place, the car insurance policy’s owner was Sheeba Roberts & Abishek wasn’t anywhere in the picture.
Meanwhile, the consumer court referred to some of the verdicts by the Supreme Court in somewhat similar cases. As per these verdicts, according to section 157 (Motor Vehicles Act, the second owner of the vehicle enjoys some specific benefits. These benefits also include insurance policy coverage if the RC is transferred on the second owner’s name.
As a result, the court highlighted that the accident took place 2 days after the Registration Certificate had been transferred.
Hence, on 18th Nov 2021, the court in its verdict held that United India Insurance Company, rejecting the claim while the policy being active, is a service deficit.
It asked United India Insurance to pay an amount of Rupees 6,58,432/- along with the interest towards the repair of the vehicle & also the additional sum amount of Rupees 25,000/- due the inconvenience caused. It also asked the insurance company an extra Rs 25,000 for damages & Rs 10,000 for court expenses.
We at Coverfox, want you to be aware about all the essential information about vehicle insurance so that you can get all the benefits. You can connect with our insurance experts by ‘Requesting a Call Back’ so that they can help you choose the right vehicle insurance policy as per your budget and needs.