‘Unregistered’ brand-new car stolen, owner wins Rs 5.68 lakh consumer payout

The Jammu and Kashmir Consumer Disputes Redressal Commission has held insurance company ICICI Lombard General Insurance Co. Ltd. liable for deficiency in service after it allegedly failed to pay the claim amount to a man whose car was stolen within a few days of purchase. The commission was hearing the case of a man whose brand-new Maruti Alto was stolen from outside his house and ordered the payment of Rs 5.68 lakh as refund and compensation.

The car owner, represented by advocate Imtiyaz Rashid Bhat, was denied the insurance payout by the insurance company on the ground that the vehicle was not registered.

President Nighat Sultana and Member Maheep Gupta found nothing in the insurance policy, availed by the owner, to indicate that the claim could be rejected for non-registration. “Since there is no enabling clause/exclusion in the policy to reject/repudiate a claim in case of non-registration of vehicle, we are of the considered opinion that the insurance company was not justified in rejecting the claim of the complainant,” they held.

‘Theft’

The man bought an Alto LXI on August 28, 2018, and paid Rs 3.64 lakh to the car dealership Jamkash Vehicleads in Srinagar for the vehicle, registration and insurance. The car was insured the same day under a Standard Private Car Package Policy; it also carried an add-on called Return to Invoice, a cover that pays the actual on-road price of the vehicle instead of just the IDV (Insured Declared Value), in case of total loss or theft, for an extra premium of Rs 316.

On the intervening night of September 1 and 2, 2018, the car was stolen from outside the man’s house. He immediately alerted the police and got an FIR registered the same day. The insurer sent an investigator to assess the claim following which man handed over all the documents and both sets of car keys.

However, ICICI Lombard allegedly turned down the claim saying that the car was bought on August 28, 2018, but was still unregistered on the date of theft, calling it a violation of Motor Vehicles Act, 1988 (the provision requiring every vehicle driven or kept in a public place to be registered).

Feeling wronged, the man approached the consumer commission. The commission noted it was an admitted fact that the vehicle wasn’t registered at the time of theft. Still, it said that the man had already paid the dealer the full registration fee on the date of purchase and it was the dealer’s job to forward that money to the RTO.

Story continues below this ad

Records before the commission indicated that the dealer remitted the registration fee to the RTO only on September 4, 2018, two days after the theft. The commission called this a (Motor Dealer Tie-up arrangement, a setup where the vehicle dealer also acts as an insurance intermediary), meaning the dealer was effectively the insurer’s own agent.

While advocate T A Malik appeared for the insurance company, other opposite parties did not appear before the commission.

On November 19, 2025, the insurance company’s counsel was directed to place on record the complete policy terms and conditions, including the ones governing the coverage under various add-on benefits, particularly the add-on cover of “Return to Invoice”.

“However, the Counsel for the O.P. Insurance Company failed to place on record the policy terms and conditions, and we were as such constrained to download the same from the Company’s website… to arrive at a fair decision. We have carefully checked the entire policy terms and conditions and could not find any enabling clause/exclusion that provides for rejection/repudiation of the claim on the ground of non-registration of the vehicle,” the commission held.

Story continues below this ad

The commission pointed out that the policy schedule left the registration number column blank, listing only the engine and chassis numbers. It asked how the insurer could issue a policy without insisting on registration details, then invoke the same missing registration to deny a claim later. It was, therefore, held there was no visible intent by the man to break the law, and he “cannot be penalised on account of delay in remitting the fee to the RTO by the dealer”.

The insurance company was held to be deficient in service and was directed to pay the man Rs 3.54 lakhs covering the on-road price of the vehicle as the fair value of the car. The commission further awarded Rs 1.64 lakh towards the delay with a 6 per cent annual interest calculated over 2,822 days and Rs 50,000 towards mental agony and litigation expenses, totalling Rs 5.68 lakh.

“Complaint is allowed, and the O.P. Insurance Company is directed to pay Rs 5,68,500 to the Complainant within 30 days of this order, failing which the Insurance Company shall be liable to pay further interest @6% p.a. on the entire amount of Rs.5,68,500/- to be calculated from the date of this order till the date of deposition,” the consumer body held.

For consumer-related grievances, individuals may contact the consumer helpline in their respective states (Jammu and Kashmir Consumer Commission Helpline: 1800 180 7114) or call the National Consumer Helpline at 1915 for assistance.

Story continues below this ad

Written by Avinash Verma (Avinash is an intern with the Indian Express)