Kathmandu. The Nepal Insurance Authority (NEA) has ruled that the insurance company cannot reject the claim on any pretext as the insurance policy and tax invoice have already been issued. The NEA has rejected the claim of Sagarmatha Insurance Company Limited, arguing that the insurance company Sagarmatha Insurance Company Limited has received the insurance premium late.
The NEA has ordered the insured Rewati Bagebari Construction and Suppliers to pay Rs 3,162,236 (excluding VAT) for the loss due to the fire in the excavator.
Brief facts of the case:
An excavator (Ba 2 Ka 7387) belonging to Rewati Baghewari Construction was damaged in the fire that took place at Kushe rural municipality in Jajarkot. The insured had filed an application with the insurance company claiming that the incident took place on December 6, 2020. However, when the insurance company investigated, it was found that the incident took place on December 2 and the insured had deposited the money in the bank only on December 21.
Basis of Authority’s decision:
While studying the documents of both the parties, the authority has considered three main things:
The insurance company had issued the tax invoice on October 6, 2020 and the insurance policy was issued on October 9, 2020. When an insurer issues a policy, it is deemed to have agreed to bear the risk of the property. According to the Insurance Act, you should not bear the risk without taking the insurance premium. If the company issues the policy without charging a fee, then the company itself is to blame, not the insured.
Principle of Estoppel:
In this case, the Authority has made the ‘doctrine of contractual law’ the main basis.
“If one party (the insurer) convinces the other party that ‘you are safe’ through his conduct or document (by issuing the policy), then he cannot shirk his responsibility in the long run. “
Insurance companies should not have issued insurance policies without charging a premium. However, the authority has held that it is not legally correct to say “I got the money” after the issuance. The insurer cannot punish the insured for his procedural error.
Lessons to be learned from this decision:
1. For the Insurer: To not issue an insurance policy or cover note under any circumstances without ensuring that the premium is received. Daily reconciliation of your internal system and bank statements. To completely discourage the tendency of agents or employees to insure on credit.
2) For the insured (customer): To pay the insurance premium immediately as soon as the insurance is purchased. Late payment may raise suspicion of bad faith at the time of claim. In case of an accident, immediately inform the police and insurance company and maintain consistency in the documents.
3. For public agencies: While preparing the police report, the date, time and place details should be clearly written and not manipulated, so that the victim can get justice on time.
