“Merely because the licence was subsequently found to be fake, the claim of the Respondent (Dalal) could not have been rejected,” the commission said on September 10, holding that the insurer had failed to establish Dalal’s knowledge of the alleged fake licence or a wilful breach of the policy condition.
The dispute arose from an accident on February 20, 2010. Dalal’s SUV, insured with the private insurer from June 30, 2009, to June 29, 2010, was being driven by one Surender Singh when it met with an accident and was heavily damaged. Dalal subsequently got the SUV repaired and paid Rs 5,89,427.
Owner said he had checked licence
Dalal’s case was that he had appointed Singh as his driver after verifying his driving licence and satisfying himself that he was duly licensed. After the accident, Dalal contacted the dealer in Gurugram and the insurer for repairs. The insurer refused to pay, citing the driver’s licence.
Dalal then paid Rs 5,89,427 for the repairs and approached the consumer forum seeking reimbursement, besides compensation for harassment, inconvenience, mental agony and litigation. The district commission accepted Dalal’s contention that he had satisfied himself about the driver’s licence when employing him.
The commission observed that where a licence produced by a driver appears genuine, and the driver is competent to drive, an owner cannot ordinarily be expected to independently verify it with transport authorities. It held that even if the licence later turned out to be fake, the insurer could not avoid liability unless it was shown that the owner knew about it and still permitted the driver to operate the vehicle.
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The forum directed the insurer to pay Rs 5,89,427 towards the repair costs with 9 per cent annual interest from the date of filing of the complaint until realisation. It also awarded Rs 1 lakh towards harassment, inconvenience, tension, mental agony and litigation.
Insurer’s challenge
The insurer challenged the order before the state commission, relying on an investigation report dated May 26, 2010, and alleged verification from the concerned transport authority to contend that Singh’s licence was fake.
The insurer argued that the policy required the vehicle to be driven by someone holding an effective and valid driving licence and that use of the vehicle with a fake licence amounted to a breach of the policy condition. It also contended that provisions concerning third-party claims could not be extended in the same manner to an own-damage claim by the insured.
Dalal opposed the appeal, arguing that the alleged proof of the fake licence had not been properly established. He pointed out that neither the surveyor or investigator nor a competent official from the licensing authority had been examined before the district commission.
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“The existence of a policy condition regarding a valid driving licence does not by itself establish a wilful breach by the insured,” the commission said adding that the insurer was required to establish that Dalal knowingly permitted the vehicle to be driven by someone without a valid licence.
The commission said that no error or illegality in the district commission’s order and dismissed the insurer’s appeal. It directed to pay Rs 5,89,427 with 9 per cent annual interest from the date of filing of the complaint until realisation, along with Rs 1 lakh compensation.
Takeaway
If a driver’s licence is later found to be fake, an insurer cannot automatically reject the own-damage claim; the insurer must establish that the vehicle owner knew about the fake licence or wilfully breached the policy condition.
For consumer-related grievances, individuals may contact the consumer helpline in their respective states (Delhi: 1800-11-4000) or call the National Consumer Helpline at 1915 for assistance.
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