On In its first, Maharashtra would be the 1st state in India to introduce mandatory property insurance
for shops and establishments registrations. The labor department has issued notification to add
insurance in the documents required for registration as a part of the Shops and Establishment
rules. The proposed insurance would be similar to that of a third party insurance policy in motor
insurance which is mandatory as per the law. The policy is expected to cover the establishments
against fire and allied perils such as fire, lightning, explosion, etc. The insurance policy needs to
be submitted at the time of registration, renewal of registration, intimation of commencement of
business with less than 10 employees and at the time of annual return. So the act almost makes
sure that the property insurance is valid throughout the year and eliminates any chance of one
time exercise. No shop can trick the government without taking the policy as it becomes
mandatory at every stage to have a valid policy.
There could be potential possibilities of cheating and fake insurance policies floating in the
market after this draft. IRDA should step in to make sure that there are no frauds being
committed by unauthorized agents selling fake property insurance policies to the shops. It would
be better if IRDA designs a portal where the Municipal administration could check the validity
and authenticity of the insurance policy submitted by the applicant which could increase the
transparency and also the insurance penetration. This would be similar to the mandatory public
liability insurance policy mandated by the Honourable court for industrial establishments after
the Bhopal gas tragedy.
Fundamental breach of condition should be the basis for claim rejection-Supreme Court
The supreme court has noted that the reason for claim rejection should only be on the basis of fundamental breach of the policy conditions while hearing a case of vehicle theft. An insured customer has taken a motor insurance policy for his truck from New India Assurance Co. Ltd for the F.Y 2008-2009 with a sum insured of Rs. 8.4 Lakhs. One day the driver of the vehicle left the ignition key on for a few minutes during which the vehicle was stolen. The driver/owner immediately filed an FIR with the police and after adequate efforts the police gave an untraceable certificate which was used to claim compensation. The insurer rejected the claim citing the violation of 5th condition of the policy which states,"the insured shall take all reasonable steps to safeguard the vehicle insured from loss or damage and to maintain it in efficient condition".
Aggrieved by this decision the insured approached the Consumer redressal forum which awarded the claim on nonstandard basis. The insurer challenged the claim in supreme court but the court ruled against the insurer stating that the time the driver left the truck was minimal and it doesn't show negligence on the part of the insured and moreover this is not a fundamental condition which is breached, so the claim can be settled on a nonstandard basis. Nonstandard claim is one in which the conditions and warranties of the policy are not fully complied.