Delay in Informing Insurer Not Fatal If FIR Lodged Promptly: NCDRC Finds Cholamandalam Insurance Guilty of Deficiency in Service

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The National Consumer Disputes Redressal Commission (NCDRC) has once again reaffirmed that technical delays in intimating an insurance company about a theft claim cannot override the substantive compliance of promptly lodging an FIR and cooperating with the investigation. In this ruling, the insurer was held liable for deficiency in service due to its arbitrary rejection of a genuine claim.

Citation: Cholamandalam MS General Insurance Co. Ltd. v. Seema Garg, Revision Petition No. 1777 of 2018, decided on July 3, 2025, National Consumer Disputes Redressal Commission (NCDRC)

Bench: AVM J. Rajendra (Presiding Member), Dr. Justice Sudhir Kumar Jain (Member)

Facts of the Case

  • The complainant, Seema Garg, had insured her vehicle with Cholamandalam MS General Insurance Company.
  • Her vehicle was stolen, and she promptly lodged an FIR with the local police.
  • However, there was a delay of a few days in intimating the theft to the insurer, which was later cited by the insurer to repudiate the claim.
  • The complainant approached the District Forum, which ruled in her favour. The order was upheld by the State Commission.
  • The insurer filed a revision petition before the NCDRC, arguing that the delay in informing them constituted a breach of policy terms and justified rejection of the claim.

Findings of the NCDRC

  1. Prompt FIR more crucial than insurer intimation:
    • The Commission observed that once the FIR is promptly registered and the investigation begins, the purpose of immediate intimation to the insurer—namely, early recovery or assessment—is substantially served.
  2. No deliberate delay or malafide intent:
    • It was established that the delay was not intentional, fraudulent, or unreasonable, and the insured had cooperated fully with both police and insurer during the claim process.
  3. Policy conditions not absolute:
    • The Commission reiterated that terms of the insurance policy cannot be interpreted in an overly rigid manner, especially when it would result in denial of a legitimate claim.
  4. Deficiency in service established:
    • Cholamandalam Insurance’s refusal to honour the claim without evaluating the merit of the loss or theft was seen as a deficiency in service under the Consumer Protection Act.

Conclusion

The NCDRC dismissed the revision petition and upheld the concurrent findings of the lower forums, directing Cholamandalam General Insurance to settle the claim along with appropriate compensation for mental agony and litigation costs.

Legal Significance

  • This decision reinforces consumer protection jurisprudence that insurers cannot deny claims based solely on technicalities like delayed intimation if the insured has acted in good faith.
  • It highlights the doctrine of substantial compliance with insurance conditions and promotes a pro-consumer interpretation of policy clauses.

Key Takeaways for Policyholders and Insurers

  • Policyholders should inform insurers at the earliest but need not fear outright rejection if FIR is promptly lodged.

  • Insurers must evaluate claims on merits and factual matrix, not just on procedural defaults.

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