Insurance firm must pay for insured car

Anybody who owns a vehicle is aware that insurance is mandatory for third party accidents. Most owners, however, prefer to take comprehensive insurance for their vehicles to indemnify theft, fire, floods, damage etc. Very few are aware that the liability of the insurance company is for the depreciated amount of the value of the car and not for the original value.

However, the Delhi State Consumer Dispute Redressal Commission has held that the insurance company has a liability to the consumer for the full sum insured and depreciation calculated thereon in case of any loss to the consumer. In New India Assurance Co. Ltd. Vs. Indira Rani Saini, the court has held that it is for the insurance company to take upon itself the liability of assessing whether the vehicle being insured is worth the amount for which it is claimed to be valued.

Saini had a Maruti Van, which was insured for a sum of Rs90,000. The said vehicle was stolen and never recovered. When the consumer went to the company to put up her claim, the same was passed on to a surveyor for assessment of the ‘true value’ of the same. The surveyor assessed that a similar make would have cost about Rs62,000 and hence offered Saini only that much.

Saini took the matter to the Consumer Court. Stating the vehicle was valued for Rs90,000, she demanded full payment. The company did not budge. The State Commission held the appellant shall pay the sum of Rs90,000 less 10 per cent towards depreciated value of the vehicle as it was an old vehicle and stolen after seven months…”