UNDERSTAND THE BASICS: INSURANCE & ARBITRATION

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Shubham Budhiraja[1]

In Insurance matters, there are principally two kinds of Insurance namely;

(I)                 Life Insurance & Health Insurance

-          Whole life insurance

-          Linked with Investment plan

(II)               Industrial Insurance

-          Fire & peril Policy

(a)    Cause of Fire

(b)   Loss on plant, machinery, stock, furniture

(c)    Exclusion clauses in policy

-          Business Interruption policy

(a)    period of interruption

(b)   performance guarantee test

(c)    reason of interruption

(d)   pre-conditions to operate policy such as COD should be achieved

-          Erection all risk cover policy

(a)    Material damage proviso

(b)   Recovery rider clause

-          Marine Insurance

(a)    Road rail transit coverage

(b)   Change of warehouse

(c)    Reason for damage of consignment

(d)   Negligence & Non-cooperation of policy holder

-          Motor Insurance

(a)    Negligence of driver & contributory negligence

-          Title Insurance

(a)    RERA Property cases

The Industrial policies are of huge amount and it involves various parties often such as for insurance of a thermal power project, there are contractor of insured (BHEL) who itself taken insurance policy, there are Govt. companies who distribute the power, etc. In each of Industrial policies, once the event has happened, the insured appoint surveyor to assess the loss and make assessment of claim and thereafter Insurance Company determine the claim amount.

The Redressal against Insurance Company is;

(i)                 Consumer complaint alleging deficiency for termination of claim

(ii)               Arbitration clause for quantum of loss or damage but non-arbitral where claim is totally repudiated by Insurance co.

(iii)             Civil Court when matter is non-arbitral such as when Insurance co. repudiate the claim relying on clauses of contract such as over-assessment by claimant, fraudulent claim, reason for fire is spontaneous combustion, etc.

There are basically 5 types of dispute that occurred in Insurance matter;

(I)                 Discharge voucher accepted in full & final: In such a case, matter is not arbitral and settlement arrived act as binding agreement and can be enforced as consent decree under order 23 Rule 3 CPC. The claimant cannot file arbitration in such a case

 

(II)               Discharge voucher accepted but in protest: In such a case, matter is arbitral and arbitrator decides whether the settlement arrived due to any duress, coercion, etc. and to prove this surveyor report is a documentary evidence section 91 evidence act but oral evidence also allows because validity of document due to coercion is in question & thus falls in exception/ proviso to section 92 of evidence act

 

(III)             Repudiation / Non-admission of claim: In such a case, matter is non-arbitral because of limited arbitral Insurance clause. The remedy would be moving the civil court or consumer forum

 

(IV)             Partly Repudiation & Partly admitted: only for the admitted part, the dispute can be decided by the arbitrator if there is difference on quantum of claim but for the non-admitted claim, there can be no reference to arbitration & relief would lie before a civil court.

 

(V)               Delay in survey report: The writ jurisdiction can be moved in a case where surveyor has made ample delay in providing the survey report and the settlement is grossly delayed due to such. The arbitration can also be a remedy if there is ample delay in providing survey report if there is deemed admission of liability on part of Insurance company.

 

Views are personal & subject to Copyright protection


[1] Advocate, Delhi High Court, Associate Company Secretary, Member-Delhi High Court Bar Association, 9654055315, Shubhambudhiraja02@gmail.com

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