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Noncompliance with policy conditions: Delay in claim notification- Supreme Court Judgement

All insurance policies stipulate claim notification conditions – timelines,  details to be submitted and other steps that the insured should take in the event of a claim.It is the duty of the insured to ensure compliance with all policy conditions including claim notification provisions. Otherwise, it may prejudice the claim and courts may not always come to the rescue.

Insurance Regulatory and Development Authority of India (IRDAI), vide its circular no. IRDA/HLTH/MISC/CR/216/09/2011 dated 20-9-2011 advises insurers to not deny claims solely on the ground of of delay, particularly when the delay in intimation of claim or submission of documents is due to unavoidable circumstances. The circular can be found here. But, this does not offer a carte blanche to insureds to notify the claim any time they want disregarding the policy provisions.

Insurance policy holders need to be conscious of the implications of delayed notification. More so, following the judgement of Supreme Court in Sonell Clocks and Gifts Ltd v. The New India Assurance Co Ltd. case. Given below are excerpts from the judgement of a three-judge bench of the Supreme Court of India. The judgement can be found here.

“That contention cannot be taken forward at the instance of the appellant who has failed to fulfill the threshold stipulation contained in Clause 6 of the general conditions of the policy and for which reason must suffer the consequence. It is not a technical matter but sine qua non for a valid claim to be pursued by the insured, as agreed upon between the parties.

“In view of the above, we uphold the conclusion of the Commission that the respondent (insurer) had not waived the condition relating to delay stipulated in Clause 6 of the general conditions of the policy, by appointing a surveyor. Accordingly, these appeals must fail.”

Clause 6 reads as under:

“6. (i) On the happening of any loss or damage the insured shall forthwith give notice thereof to the Company and shall within 15 days after the loss or damage, or such further time as the Company may in writing allow in that behalf, deliver to the Company …………………………….. No Claim under this policy shall be payable unless the terms of this condition have been complied with.”

So, it is imperative to understand and appreciate the importance of all policy conditions and be attentive to ensure compliance with them including claim notification provisions.

P. Umesh
Consultant – Liability Insurance

Disclaimer: The information contained and ideas expressed in this article represent only a general overview of subjects covered. It is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insurance buyers should consult their insurance and legal advisors regarding specific coverage and/or legal issues.