Getting insurance for rain-damaged cars an uphill task

Sheer negligence on the part of civic authorities often land citizens in distress during the monsoon. Open manholes and ditches, unattended potholes and naked wires left dangling dangerously close to pedestrian pathways are some examples. Heavy flooding and water logging of the roads is another major problem, leading to stalling of cars while traversing these roads. The damage to the engine of the car in such situations could well be severe and the cost of repair, steep. Worse, there is every possibility of the insurance company pointing to some clause or the other to reject the claim. All in all, a pretty gloomy scenario.

Well, recently, I came across two awards of the Insurance Ombudsmen that could well dispel the gloom and bring some cheer– at least in respect of insurance claims vis-à-vis rain-damaged engines.

In Lt. Col A.K.NAG Vs Bharti Axa General Insurance Company Limited, for example, the complaint before the Ombudsman had its origin in the stalling of the complainant’s car, while being driven during a heavy downpour on July 20, 2017, in Noida. According to the complainant, when he tried to re-start the car, he noticed white smoke coming out of the exhaust pipe. The service centre to which the vehicle was taken said the engine was damaged .

The complainant promptly informed the insurer about it and a surveyor was sent to inspect the car, but eventually, the insurer repudiated the claim saying that ‘mechanical breakdown’ and not water was the cause of the engine damage and since the comprehensive motor vehicle policy did not include an add-on ‘engine protection cover’ , the insurer cannot pay. .

In order to decide the case, the Ombudsman sought the opinion of an independent Insurance Regulatory and Development Authority (Irda)-approved surveyor. His view was that due to sudden water logging caused by heavy rain, the engine had been damaged. So the main cause of loss was flood or rain water (natural calamity) peril, which was not excluded in the comprehensive motor vehicle policy. In view of this, the rejection of the claim was unfair and unjust and the complainant should be paid Rs 152,900, the Ombudsman said. (Date of award: December 22, 2017)

In yet another case (Shri Jitendra Kumar Vs IFFCO Tokio General Insurance Company Ltd) emanating from engine damage caused during heavy rain on June 21, 2017, the insurer argued that the breakdown had occurred on account of mishandling and using the vehicle after engine damage caused by rain water. Thus this was a consequential loss, not covered under the policy, the insurer said. Besides, the information about the breakdown was given after a delay of 24 days, a violation of the policy condition which stipulates immediate intimation to the insurer.

In this case too, the Ombudsman sought the technical advice of an independent IRDA-APproved surveyor, who opined this was not a consequential damage as the water had entered the engine box and caused damage to the engine parts. The damage thus caused by rain water came under the category of ‘flood and inundation’, a peril covered under the policy. So here too, the Ombudsman said the denial of claim was unjust and unfair.

However, keeping in mind the delay in informing the insurer , the insurance company was directed to settle admissible loss on ‘substandard basis’ to the insured. .(Date of award: December 21, 2017)

Given the atrophied state of our civic bodies, water logging is a perennial problem and the least the insurers can do is to minimize the misery of consumers by honouring claims quickly and fairly. They should also educate consumers on driving on flooded roads and dealing with a stalled car, so that they do not violate any conditions in the policy.