Valid vehicle registration a must for claiming motor insurance benefit

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Valid vehicle registration is a must not only to avoid penalties by law enforcement agencies but also to claim motor insurance benefits. The Supreme Court observed that an insurance claim can be rejected if the vehicle is used without a valid registration since that would constitute a fundamental breach of the terms and conditions of the contract of insurance.

Court Observations

The bench of Justices Uday Umesh Lalit, S. Ravindra Bhat and Bela M. Trivedi observed that when an insurable incident that potentially results in liability occurs, there should be no fundamental breach of the conditions contained in the contract of insurance, legal news portal Live Law reported. If on the date of theft, the vehicle had been driven/used without valid registration, it amounts to a fundamental breach, the bench held.

The court noted that in Narinder Singh Vs New India Assurance Company it was held that using a vehicle on the public road without any registration is not only an offence punishable under Section 192 of the Motor Vehicles Act but also a fundamental breach of the terms and conditions of policy contract.

The Case

The observations came in a case wherein the policyholder had purchased a new Bolero. The policyholder had obtained a temporary registration for the vehicle which expired. He travelled outside his residence in the Bolero without a permanent registration and parked the vehicle outside the premises of a guest house from where it was stolen, according to the news portal.

The insurer rejected his claim on the ground that the temporary registration of the vehicle had expired. The policyholder approached the District Forum seeking a direction to the insurer to pay him the sum insured for the vehicle with rent amount of Rs 1,40,000 but lost the case.

According to the Live Law, the State Consumer Disputes Redressal Commission, which he approached, observed that the insurer could not repudiate a genuine claim on “technical, petty and frivolous grounds of absence of permanent registration certificate from the competent authority and thus escape its liability to indemnify the insured for the loss of the vehicle”.

The case reached the apex court after the insurer’s revision petition before the National Consumer Disputes Redressal Commission was dismissed.