Insurance Claim Can Be Denied If Vehicle Driven Without Valid Registration: Supreme Court

The Supreme Court ruled that a claim for bike insurance for the theft of an automobile with temporary registration could not be honoured because the vehicle did not have a legal registration.

If there was a severe violation of the terms and conditions of the policy, the Bajaj 2-wheeler insurance should be rejected and agreed to by a court led by Justice UU Lalit. The bench, which also included Justices S Ravindra Bhat and Bela M Trivedi, stated that as per the court’s opinion of the law, when an insurable incident resulting in liability happens, there should be no fundamental breach of the conditions contained in the contract of insurance.

The Case

According to the circumstances, Sushil Kumar Godara, a Sri Ganganagar, Rajasthan resident, bought Bajaj Allianz two-wheeler insurance coverage for his Bolero car from the insurer while living in Punjab.

On July 28, 2011, the complainant travelled to Jodhpur for work. He spent the night in a guest house and parked his car outside. The car had been taken, which he discovered in the morning. He filed an FIR in Jodhpur, citing violations of Section 379 of the Indian Penal Code (stealing). On November 30, 2011, the police submitted a final report that claimed the car was untraceable.

The top court stated that the car had been used on the date of theft without a valid registration, clearly in contravention of Sections 39 and 192 of the Motor Vehicles Act, 1988. As stated by the Court to Narinder Singh, the issue resulted in a fundamental breach of the terms and conditions of the policy, which entitled the insurer to repudiate the policy. The bench declared that the court thought the National Consumer Disputes Redressal Commission (NCDRC) order could not be maintained.

Due to the temporary registration of the car lapses, the bike insurance claim was rejected. Later, he approached the District Forum and stated that the insurance reimbursed him the money insured for the vehicle, plus Rs 1,40,000 in rent, as well as relief from mental anguish and litigation costs. As his complaint was denied, he filed an appeal with the State Consumer Disputes Redressal Commission.

Allowing the appeal, the state commission ruled that the insurer could not deny the insured’s legitimate claim due to the insured’s lack of a permanent registration certification from the appropriate authority and escape its obligation to pay the insured for the loss of the vehicle on technical, petty, and frivolous grounds.

The Supreme Court observed that:

  • Even if the car was not being driven when it was stolen, it would be a basic violation of the terms and conditions of the insurance contract if it was utilised or driven on a public street or any other location.
  • It was a fundamental breach of policy If, before the expiration of the temporary registration, the vehicle owner applied for the issuance of a registration under Section 41 of the Act. Still, the regular registration had not yet been issued. ^

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^ Claims are subject to terms and conditions set forth under a comprehensive two-wheeler insurance policy.

‘Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.’

Standard T&C missing.


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