Ajay purchased a bus on a hire purchase loan from XYZ Finance Limited. The bus was used as private service vehicle only. The vehicle was insured under a comprehensive motor policy issued by ABC Insurance Limited. The veh

In the above case, the insurer is not rightly justified in repudiating the claim. Some of the common reasons for repudiation of motor accident claims include the following: When losses or claims are caused by unlicensed driver. When the vehicle is unroad worthy vehicle -e.g. wipers not working, smooth tyres etc. Reckless or negligent driving e.g. "Failure to take care" clause which refers to recklessness, which is not to be confused with negligence. "Breach of road traffic regulations" clause exceeding the speed limit at the time of accident Drunk driving by the drivers who are not "regular driver". In this regards some policies cover the regular driver only or a named driver or any licensed driver. Total loss policy - which applies only when the insurer deems the vehicle to be a totally depreciated. Vehicle inspection not carried out as per the rules. Insurers insist on inspecting the vehicle at inception of the policy. This is required to avoid any disputes in future about the pre-existing damages to the vehicle. If the policyholder neglects to comply, there will be breach of contract and the claim may be rejected. Material non-disclosure at the time of underwriting stage- With regards to the claims record, a break in insurance cover, prior applications for cover being rejected and judgements on credit record are all material to the assessment of the risk and it is imperative that the policyholders should disclose such information. Vehicles used for business should be disclosed to the insurer. Vehicle not parked securely at night. If the policyholder claims that the car is parked in a garage or off the street-at night, and in the event of the theft, it is found that it was regularly in the street, claim could be rejected. Security device not fitted, in case it is mandatory that a vehicle should be fitted with an alarm or a gear lock and it is not complied with the claim can be rejected. Further, the action taken by the company is not justified for the following reasons: First, if a person has a license to drive a heavy goods vehicle, it also means that he is entitled to drive a transport vehicle including a public service vehicle, hence repudiation on this ground is not tenable. Secondly, the company is also not right in making a part payment of the amount of loss. The commission should direct the insurer to pay the balance amount including interest and costs. Thirdly, the practice adopted by insurance companies of directly paying to the financier without informing the insured or without his consent cannot be justified. If the insurance policy issued in the name of the vehicle purchaser there is no question of paying the amount directly to the financier.