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Old 27th May 2020, 15:50   #1
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Default Cholamandalam insurance wants to reject claim for driving in lockdown

Cholamandalam Insurance has issued a show cause notice to a car owner over the violation of the MV Act rules during the lockdown period.

According to the company, an insurance claim lodged with them is pending due to lack of documents. The insurer has asked the policy holder to submit a copy of the pass / permission for travel during the lockdown period. The incident had occurred on April 26, 2020.

The letter also mentions that failing to submit the relevant document within 7 days would lead them to treat the claim as a 'no claim' and no further request for extension of time would be considered.

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Old 27th May 2020, 15:56   #2
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Which state, which city, what kind of incident?
Violation of which Govt rule under MVA act?

The letter appears to be drafted by a novice.
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Old 27th May 2020, 16:37   #3
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Couple of points from a legal standpoint:
1. How was the vehicle damaged?
2. Was the damage caused due to use, or when it was parked at the location?
3. If it was being used, was it being used in accordance with the exemptions given by the State/Central government during the LockDown?
4. It has been sent via RPAD - ideally, there is no obligation to respond till the same has been physically received by the OP.
Also, with all due respect to the OP, the list of documents requested - Claim discharge voucher, Satisfaction-cum-discharge voucher and Bill of repairs, in addition to the Lockdown Pass - make it appear that the vehicle has already been repaired and the complete payment has been made.
In case of a cashless claim, you are obligated only to pay for the deductibles after the payment approval from the Insurance company. The above process comes into picture where it is not a cashless claim, and the full payment has to be made by the owner, and then a claim needs to be filed.
In the present case, the OP appears to have submitted a bill for an incident which happened on April 26, 2020, and has also been repaired - which is even more interesting as the entire country was under Lockdown at that time.
We would need more details to understand what is happening.

PS - No offense meant to the OP but things are a bit too fishy for my legal intuition
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Old 27th May 2020, 16:48   #4
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

If an insurance company refuses to settle claim during lock down, citing that driving right now is against the law, then shouldn't all insures be refunded the premium that was collected from them for a promised 12 months?
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Old 27th May 2020, 16:58   #5
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Okay! will they calculate the premium on a pro-rata basis and extend the insurance expiry?
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Old 27th May 2020, 17:21   #6
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Cholamandalam is clearly pulling a fast one. The OP might have gone out for purchasing essentials or family emergency for which no pass is required, when this happened.
Also as per the IRDA notification available on the net, particularly on Cholamandalam's own website, premium for Motor insurance can be paid upto 15th May 2020. And no, they will not refund premium for the period the vehicle is not in use.

Relevant info here:
" It has been allowed to renew the policies falling due in lockdown period on or before 15.5.2020.
Motor OD
1. Can I get refund under my Motor Insurance premium/extend validity on pro-rata basis for
the lock down period as the vehicles are not being used during the said period.
There is no such provision under motor policies issued by Insurers"



Full notice here:
https://www.cholainsurance.com/Chola...-19-Claims.pdf

Last edited by hrman : 27th May 2020 at 17:22.
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Old 27th May 2020, 20:26   #7
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by LegalEagle View Post
PS - No offense meant to the OP but things are a bit too fishy for my legal intuition
Hats off to your legal knowledge. I was about to start typing few points mentioned by you without reading your post. But thought to read your post because it was too long and was thrilled all my thoughts were covered here.

Now, I don't have any points to write here
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Old 28th May 2020, 08:18   #8
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by alpha1 View Post
Which state, which city, what kind of incident?
Date of incident = 26th April.

Location = Mahisagar, Gujarat.
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Old 28th May 2020, 09:17   #9
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by Doge View Post
If an insurance company refuses to settle claim during lock down, citing that driving right now is against the law, then shouldn't all insures be refunded the premium that was collected from them for a promised 12 months?
Why should the insurance companies refund the 12 months premium if lockdown is for 2 to 3 months, isn't refund of 3 months premium is the appropriate one? It is good if they do it as a goodwill gesture, but it is not rightful to ask a full year premium refund.

Also, why should the insurance company approve and settle the claim if the insured does something illegal according to MV Act(didn't verify the MV Act in detail if there is a lockdown related clause in it)? Suppose, an insured biker goes on the wrong side of a road which is illegal according to the MV Act or according any other related law, and if he gets his bike damaged in an accident, then isn't it right to reject his claim?

Also, this is not an outright denial/refusal, they asked for documents to further process the claim, if the OP doesn't have required documents as one doesn't need passes to go to the nearby vegetable market, then he had to say that to the company, then the company verifies the truthfulness in it and proceeds to settle the claim. But here the OP didn't mention about where & when he used his vehicle etc. We didn't have the full picture, we can't neither support nor blame any party.

Note: I am not at all related to any party in anyway, neither the insurance company nor the insured.
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Old 28th May 2020, 09:30   #10
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

The pertinent question seems to be, is there anything in MV act that links with the Disaster management act (or any act through which the Lockdown was ordered) and Vis versa. If no, then I believe it is wrong for insurance company to be denying coverage.

In the above scenario an action can be taken on breaking the Lockdown and associated law if found correct but it should not apply across the board for everything unless specified in the governing Act itself.

If there is a link then the next question would be what happens to the components of insurance policy that are affected by the lockdown decision but already paid for by millions of car users in the country.

Another question is how the policy itself underwritten? Does it absolve the coverage in case of indirect effects of Government rulings like Lockdown etc.?
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Old 28th May 2020, 10:48   #11
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

A few observations:

1. As the policy has already been issued the insurer should have put the insured on notice and refunded the premium collected informing the insured that the vehicle isn't covered under insurance before the incident - in which case the insurers stand would be valid. He cannot do so after the incident if no notice has been issued.

2. Stating the vehicle is not covered under insurance after the incident and after collecting the premium and keeping quiet without refunding will not hold valid in a court of law as an insurance is a legal contract.

3. I do not think the MV Act was amended. It was a notification applicable to all areas - shops and establishments, industries, hospitality, railways, motor vehicles etc. The relevant acts were not amended - just a notification.

4. The notice speaks of date of loss and not date of accident - so is this a case of loss of car - theft?

5. Insurance companies have a lot of these over smart guys who try to pull fast ones on an unsuspecting and usually not fully informed public. A proper response usually puts them in their place.

6. There are several insurance experts who are available for consultations - suggest the OP get the help of the experts to help him with his claim.
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Old 28th May 2020, 14:42   #12
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Is there any update on how this claim played out? Thank you
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Old 29th May 2020, 21:18   #13
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by Doge View Post
If an insurance company refuses to settle claim during lock down, citing that driving right now is against the law, then shouldn't all insures be refunded the premium that was collected from them for a promised 12 months?


That is not how insurance works. Insurance covers uncertainty. If insurance companies were to refund premium for the lock down period what would happen to Amphan victims? It would have been easier for companies to refund 2 months premium than to pay billions as claims.

OTOH will people pay an additional premium (health insurance) for COVID cover? NO. Similarly insurance companies cannot refund the premium.

Note - all insurance companies have paid salaries to all (both on roll & off roll) employees for Apr'20 & May'20.

Last edited by Karthik Chandra : 29th May 2020 at 21:21.
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Old 30th May 2020, 07:17   #14
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by Doge View Post
If an insurance company refuses to settle claim during lock down, citing that driving right now is against the law, then shouldn't all insures be refunded the premium that was collected from them for a promised 12 months?
This is like a patient saying to ICU of the hospital "You removed the IV units for 15 mins during my 3 days stay in ICU. so, return the ICU charges

Another related example
Since the lockdown was announced and driving car was banned , can I ask government to refund the Life Time tax paid for 3 months?

If the government has declared lockdown, it is the law of the country. If someone drives in spite of government orders, it is crime and can be imprisoned.

Asking for premium for the above reason doesn't stand as a case in any court.
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Old 30th May 2020, 11:17   #15
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Default Re: Cholamandalam insurance wants to reject claim for driving in lockdown

Quote:
Originally Posted by Doge View Post
If an insurance company refuses to settle claim during lock down, citing that driving right now is against the law, then shouldn't all insures be refunded the premium that was collected from them for a promised 12 months?
Not all claims arise from moving collisions on the road. Falling objects can damage the car when parked. And then there are other causes of loss such as flooding, building collapse, theft, vandalism, fire...there are so many other physical damage perils that the insurance companies still cover you against even during a lockdown. That's how they've legitimately earned their premiums during the lockdown period.
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