A purchased a car getting it financed by XYZ Finance Limited. The car was being used for a company's executives only. The car met with an accident. A filed a claim with the insurance company ABC General Insurance Limited
CS Professional · Banking and Insurance - Laws and Practice · PYQS · December 2024
A purchased a car getting it financed by XYZ Finance Limited. The car was being used for a company's executives only. The car met with an accident. A filed a claim with the insurance company ABC General Insurance Limited. The insurance company got the vehicle surveyed and the loss was assessed at ₹ 1,55,000/-. The insurance company paid the claim amount directly to XYZ finance company without any information to A. Moreover the insurance company had also deducted ₹ 36,400/- from the claim on the ground that the driver did not have any endorsement on the license to drive this vehicle for the company. In this case advise: Was it right for the insurance company to directly pay the claim amount to the finance company without any information to A?
Answer & Explanation:
No, the insurance company is not right in paying the claim amount directly to the finance company without informing A, the claimant. Even if the insurance company intended to make the claim payment to the finance company it should have informed the claimant insured and asked for his consent to do so. The insurance company and the financier cannot act in isolation without even informing the insured who has made the claim for the loss. In such case the insurance company should have either paid the claim amount to the insured or should have properly communicated with the claimant and asked for his written consent/no objection certificate to pay the claim amount to the finance company.
Topics: Insurance Laws and Practice
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