The Consumer Protection Act: Insurance Services

Are you aware of the fact that insurance complaints are governed by the Consumer Protection Act 1986? For any kind of negligence on the part of an insurer, you can approach the court and fight for justice. Section 2(1) (o) of the Consumer Protection Act covers all kinds of insurance, such as fire, life, marine and property.

Consumer Protection Act: Breach of Insurance Contract

Insurance is a type of contract between the insurer and the insured. The breach of this contract can make either party legally liable. The vital part of any contract is good faith. This means that either party cannot conceal any material facts. For instance, a proposer of a life insurance has to divulge all facts related to his health. However, the liability to prove that the insured has concealed some vital facts lies on the insurer. 

Here are some examples of defaults on the part of the insurance company while settling the claims:

• Failure to pay the claim money in case of fire.
• Failure to pay health claim for an injury or a disease mentioned in the contract
• Failure to pay claim to the nominee in case of proposer’s death.
• Failure to pay claim in case of damage of material goods, such as vehicle and house.

Consumer Protection Act: Negligence on the Part of Insurer

In Umedilal Agarwal v. United India Assurance Co. Ltd., Citation (1989)3 Comp LJ 143 (NCDRC) the complainant got the goods in his shop insured against fire. Later, the shop was gutted in fire (caused by short-circuit), and the goods in the shop were also burnt. When the insured claimed damages, the insurance company denied the claim leading to a breach of contract. The sufferer filed a lawsuit against the company. The National Commission observed that the insured was a consumer under the provision of section 2(1) (d) (ii) of the Consumer Protection Act, 1986 and held the insurance company liable for paying the compensation to the insured.