The Karnal District Consumer Commission has ordered The New India Assurance Company Limited to pay an accident claim, compensation, and legal costs to a policyholder, ruling that insurance companies cannot reject claims based on a vehicle’s age if they actively accepted the premium and issued the policy.
The commission directed the insurer to pay Rs 60,888 for the damage claim, alongside Rs 25,000 in compensation and Rs 11,000 for litigation expenses. The decision was delivered on June 16 by a bench comprising President Jaswant Singh and members Neeru Agarwal and Sarvjeet Kaur, who identified the insurer’s actions as a deficiency in service and an unfair trade practice.
Insurer Denies Claim Over Regional Age Limits
The dispute arose after the complainant’s 2012 diesel-run Hyundai Elantra crashed into a utility pole in June 2024 when the driver swerved to avoid an oncoming motorcycle. Although the owner paid Rs 2.89 lakh for repairs at an authorized workshop and submitted the bills, the insurance firm rejected the claim.
The insurer defended its decision by citing National Green Tribunal and Supreme Court directives, alongside a 2021 Delhi government transport department circular, which prohibit diesel vehicles older than 10 years and petrol vehicles older than 15 years from operating in the National Capital Region (NCR). Because the accident occurred within the NCR, the company argued that operating the 12-year-old vehicle violated local laws and invalidated the claim.
Policy Issued Despite Regulatory Restrictions
The vehicle had been insured for a premium of Rs 12,000, with a policy issued for the period spanning March 31, 2024, to March 20, 2025.
In its ruling, the consumer court dismissed the insurer’s objections, labeling the denial of the claim arbitrary and unjustified. The bench pointed out that the company had verified the vehicle’s documents and age before accepting the premium and issuing the active policy.
The commission noted a growing industry trend where insurance companies issue policies under false assurances but raise technical objections once a claim is made. The bench concluded that since the insurer was fully aware of the regional guidelines when it issued the policy, it could not subsequently deny its liabilities.
