Insurer Wins: Policy Location Prevails Over Mobile Machine Argument.


11 October 2024 Consumer Law >> Civil & Consumer Law   |   Consumer Protection Act >> Consumer Rights  

A consumer forum has dismissed a complaint against an insurance company in the matter of M/s. Mohan Mines Pvt. Ltd. v/s M/s. United India Insurance Company Ltd. & Another, upholding the insurer's decision to repudiate a claim for a damaged hydraulic excavator. The ruling centered on a significant discrepancy between the location of the insured machinery as stated in the policy and the actual location where the damage occurred.

The complainant, a mining and construction company, had insured a Kobelco SK 350 LC Hydraulic Excavator under a Standard Fire and Special Perils (SFSP) policy with United India Insurance Co. Ltd. The excavator, used for mining operations, was damaged in a rockslide at a site in Bharatpur, Rajasthan. However, the insurance policy listed the location of the machinery as Faridabad, Haryana.


 

 

The complainant argued that the excavator was a mobile machine and could be used at multiple sites. They also contended that the Vijaya Bank (now Bank of Baroda), which had provided a loan for the excavator, was responsible for the incorrect location listed in the policy. The complainant asserted that the excavator was always intended for use at the Bharatpur mining site, and the Faridabad address was irrelevant.

However, the insurance company repudiated the claim, citing the policy's location-specific nature. They argued that the SFSP policy covered losses only at the location specified in the policy document. The surveyor's report corroborated this, stating that the damage occurred at a location different from the one insured.

The consumer forum, after reviewing the evidence and submissions, sided with the insurance company. They emphasized that the SFSP policy is fundamentally tied to the risk location stated in the policy. The forum rejected the complainant's argument that the excavator's mobility negated the location specificity of the policy.

Furthermore, the forum dismissed the complainant's contention that the bank was responsible for the incorrect location. They stated that it is the insured's primary duty to ensure the accuracy of policy details and seek amendments if necessary.

The forum also highlighted the significant premium difference between a motor insurance policy, which the complainant had previously held for the excavator, and the SFSP policy. They inferred that the complainant had knowingly opted for the cheaper SFSP policy, which did not cover the risk at the Bharatpur location.

In its ruling, the forum relied on Supreme Court precedents, such as Khatema Fibers Vs. New India Assurance Co. Ltd. and Sri Venkateshawara Syndicate Vs. Oriental Insurance Co. Ltd., which emphasize the importance of surveyor reports and the limited scope for consumer forums to overturn them unless they are arbitrary or baseless.

Consequently, the consumer forum dismissed the complaint, finding no deficiency in service on the part of the insurance company. The ruling underscores the importance of accurate policy details and the location-specific nature of SFSP policies.


Life Insurance Corporation Act, 1956

Consumer Protection Act, 1986