SC:If theft reported to police in time, delay in informing insurer not fatal to claim

The Hon’ble Supreme Court, on 24th January 2020, in the matter of Gurshinder Singh v. Shriram General insurance Co. Ltd. & Anr. pronounced that when an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.

Question before the Court:

Whether delay in informing the occurrence of the theft of the vehicle to the insurance company, though the FIR was registered immediately, would disentitle the claimant of the insurance claim.

The Hon’ble Supreme Court observed that:

Generally, an insurance contract is governed by the rules of interpretation applicable to the general contracts. However, due to the specialized nature of contract of insurance, certain rules are tailored to suit insurance contracts. (Para 10) This contract is to be interpreted according to the context involved in the contract. (Para 11)

There is no gainsaying that in a contract, the bargaining power is usually at equal footing. In this regard, the joint intention of the parties is taken into consideration for interpretation of a contract. However, in most standard form contracts, that is not so. In this regard, the Court in such circumstances would consider the application of the rule of contra preferatum, when ambiguity exists and an interpretation of the contract is preferred which favors the party with lesser bargaining power. (Para 11)

Usually, mere delay in informing the theft to the insurer, when the same was already informed to the law enforcement authorities, cannot amount to a breach of ‘duty to co­operate’ of the insured. (Para 17)

When an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured. (Para 20)

Copy of judgement: Judgement_24-Jan-2020

-Adv. Tushar Kaushik

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