Constructive Total Loss Claims-----Aggregate cost vs Net Liability & some decisions.
Ashok Kumar Singh.
Respected all,
I am sharing some points on Constructive total loss claims as under,-
Point-1. As per Surveyor Regulations 2015,-- Duties & Responsibilities of a Surveyor & Loss Assessor
(k) Assessing liability under the contract of insurance.
Point-2. As per India Motor Tariff
GR.8. Insured‟s Declared Value (IDV)
The Insured‟s Declared Value (IDV) of the vehicle will be deemed to be the „SUM INSURED‟ for the purpose of this tariff and it will be fixed at the commencement of each policy period for each insured vehicle.The IDV of the vehicle is to be fixed on the basis of manufacturer‟s listed selling price of the brand and model as the vehicle proposed for insurance at the commencement of insurance /renewal and adjusted for depreciation. The IDV of the side car(s) and / or accessories, if any, fitted to the vehicle but not included in the manufacturer‟s listed selling price of the vehicle is also likewise to be fixed.
The schedule of age-wise depreciation as shown below is applicable for the purpose of Total Loss/ Constructive Total Loss (TL/ CTL) claims only.
A vehicle will be considered to be a CTL, where the aggregate cost of retrieval and / or repair of the vehicle subject to terms and conditions of the policy exceeds 75% of the IDV.
The depreciation for replacement of parts in partial loss claims will be as per a separate schedule specified under GR.9.
SCHEDULE OF DEPRECIATION FOR ARRIVING AT IDV
AGE OF THE VEHICLE-----------% OF DEPRECIATION FOR FIXING IDV
Not exceeding 6 months-----------------------------------5%
Exceeding 6 months but not exceeding 1 year---15%
Exceeding 1 year but not exceeding 2 years------20%
Exceeding 2 years but not exceeding 3 years----30%
Exceeding 3 years but not exceeding 4 years----40%
Exceeding 4 years but not exceeding 5 years----50%
NOTE: IDV of vehicles beyond 5 years of age and of obsolete models of the vehicles ( i.e. models which the manufacturers have discontinued to manufacture) is to be determined on the basis of an understanding between the insurer and the insured.
For the purpose of TL/CTL claim settlement, this IDV will not change during the currency of the policy period in question. It is clearly understood that the liability of the insurer shall in no case exceed the IDV as specified in the policy schedule less the value of the wreck, in „as is where is‟ condition.
GR.9. Depreciation on Parts for Partial Loss Claims:-
The following rates of depreciation shall apply for replacement of parts for partial loss claims in respect of all categories of vehicles / accessories.
1. Rate of depreciation for all rubber nylon/ plastic parts, tyres and tubes, batteries and air bags -50%
2. Rate of depreciation for all fibre glass components -30%
3. Rate of depreciation for all parts made of glass --Nil
4. Rate of depreciation for all other parts including wooden parts is to be as per the following schedule
:
AGE OF THE VEHICLE-----------------------------------% OF DEPRECIATION
Not exceeding 6 months-----------------------------------Nil
Exceeding 6 months but not exceeding 1 year----5%
Exceeding 1 year but not exceeding 2 years------10%
Exceeding 2 years but not exceeding 3 years----15%
Exceeding 3 years but not exceeding 4 years----25%
Exceeding 4 years but not exceeding 5 years---35%
Exceeding 5 years but not exceeding 10 years--40%
Exceeding 10 years----------------------------------------50%
Point- 3. Constructive Total Loss (CTL):- All the vehicle which are damaged extensively and are beyond economical scope of repairs are to be termed as a case for constructive total loss.Here the cost of retrieval repairs & restoration of the vehicle to its pre accident form is not economical, prohibitive & not justified. Here we compare the cost of repairs to that IDV on the vehicle to arrive at the fair decision.
Point - 4. Total Loss:- All the vehicles which are destroyed and can not be restored back to its original form, can be termed as case for total loss. Example--theft vehicle, completely fire burnt vehicle & etc.
Point - 5. Now I am sharing here 03 examples of it's :-
Ist example:-
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB
SECTOR 37-A, DAKSHIN MARG, CHANDIGARH. First Appeal No.730 of 2012.
Date of Institution: 01.06.2012.
Date of Decision: 28.03.2014.
Surinder Pal Mittal S/o Sh. Dev Raj C/o Mittal Traders, Nabha Gate,
Sangrur.
.....Appellant/Complainant
Versus
Bajaj Allianz General Insurance Company Limited, SCF No.12 and 13,
GDNS Market, Patiala, through its Manager.
...Respondent/OP.
First Appeal against the order dated
19.04.2012 passed by the District
Consumer Disputes Redressal Forum,
Patiala.
Before:-
Shri Inderjit Kaushik, Presiding Judicial Member.
Shri Jasbir Singh Gill, Member.
...................................
Present:- Sh. Munish Goel, Advocate, counsel for the appellant.
Sh. Vishal Aggarwal, Advocate, counsel for the respondent.
----------------------------------------
INDERJIT KAUSHIK, PRESIDING JUDICIAL MEMBER:-
1. This order will dispose of the two (2) appeals i.e. F.A. No.730 of 2012 (Surinder Pal Mittal Vs. Bajaj Allianz General Insurance Co.Ltd.) and F.A. No.1291 of 2012 (Bajaj Allianz General Insurance Co.Ltd. Vs. Surinder Pal Mittal) as both the appeals are directed against the same order dated 19.04.2012 passed by the learned District Consumer Disputes Redressal Forum, Patiala (in short "the District Forum"). Facts are taken from F.A. No.730 of 2010 and the parties would be referred by their status in this appeal.
2. Facts in brief are that Sh. Surinder Pal Mittal, appellant/complainant (hereinafter called "the appellant") filed a complaint under section 12 of the Consumer Protection Act, 1986 (in short, "the Act") against the respondent/opposite party (hereinafter called as "the respondent"), pleading that he purchased a Ford Endeavour Vehicle from Bhagat Ford (M/s A.B. Motors Pvt. Ltd.), Patiala and the said agency arranged the insurance for the vehicle from the respondent and the vehicle was comprehensively insured. The vehicle was having registration No.PB-13-W-0555. The appellant paid Rs.26,474/- as premium of the vehicle and the vehicle was insured for a sum of Rs.15,22,565/- which was the Insured Declared Value of the vehicle and the cover note bearing No.BZ-0802954604 for the period 10.12.2009 to 09.12.2010 was issued.
3. The said vehicle met with an accident on 31.08.2010 and it was totally damaged and the appellant as well as other occupants of the car received multiple injuries. The respondent was immediately informed. At the time of accident, the car was being driven by Sh. Jeet Pal Mittal S/o Sh. Dev Raj, resident of Sangrur, who is real brother of the appellant and was having a valid driving licnece.
4. As per the directions of the surveyor of the respondent, the vehicle was shifted to M/s A.B. Motors Pvt. Ltd. (Bhagat For), Patiala, which is the authorized service centre of the Ford vehicles. The said M/s A.B. Motors prepared the estimate of the damaged vehicle to the tune of Rs.23,62,900/- and the vehicle was not repairable and the same was declared a total loss by the respondent. The appellant submitted all the documents and completed all the formalities, but the claim was not paid on one pretext or the other. On 03.12.2010, the appellant served a legal notice on the respondent, but no reply was filed. The appellant is entitled for the insured value of the vehicle without any deduction alongwith Rs.55,000/- as medical expenses and Rs.6500/- for shifting the vehicle from the site of the accident.
5. Since the date of the accident, the appellant is unable to use the vehicle and he is dependent upon other persons for travelling and has to hire taxi which has caused a great financial loss. The appellant also suffered lot of mental tension and harassment as well as inconvenience and is entitled to compensation of Rs.1.00 lac.
6. It was prayed that the respondent may be directed to pay Rs.15,22,565/- alongwith interest @ 18% p.a. from the date of accident till payment and to pay Rs.55,000/- medical expenses, Rs.6500/- for shifting the vehicle, Rs.1.00 lac as compensation and Rs.15,000/- as litigation expenses.
7. In the written version filed on behalf of the respondent, preliminary objections were raised that the appellant has obtained the insurance cover from the respondent w.e.f. 10.12.2009 to 09.12.2010 for a sum of Rs.15,22,565/-. The said cover was granted strictly as per the terms and conditions of the policy. The appellant reported the loss, stating that the vehicle has met with an accident on 31.08.2010 at 5.00 P.M. and the answering respondent immediately deputed Sh. Gurwinder Singh Bahri, an IRDA approved Surveyor and Loss Assessor and the said surveyor assessed the loss to the tune of Rs.10,80,175/-, but the appellant was not ready to cooperate and the respondent was forced to repudiate the claim. The vehicle was repairable and only the appellant was requested vide letter dated 13.10.2010 for production of the vehicle for repair, for supply of estimate for repair and the original bills of repair. Reminders were also issued vide letters dated 20.10.2010 and 27.10.2010 and ultimately, the case was closed, as the appellant did not cooperate and the claim was repudiated vide letter dated 18.11.2010. The complaint is false and frivolous and is liable to be dismissed with special costs.
8. On merits, similar pleas as taken in preliminary objections were repeated and denying allegations of the complaint, it was prayed that the complaint may be dismissed with costs.
9. Parties led evidence in support of their respective contentions by way of affidavits and documents.
10. After going through the documents and material placed on file and after hearing the learned counsel for the parties, the learned District Forum observed that the appellant cannot ask for reimbursement of the IDV even if the estimate for the repair as obtained by the appellant from A.B. Motors Pvt. Ltd. comes to Rs.23,62,900/- and as per summary report Ex.R-6 given by the surveyor, it has been worked out at Rs.22,75,900/- and the net amount payable has been worked out at Rs.10,80,175/-. The complaint was allowed and the respondent was directed to get the vehicle of the appellant repaired, taking into account the estimate Ex.C-6 as also the summary report Ex.R-6, so as to bring the vehicle in the same position, as it was at the time of accident.
11. Aggrieved by the impugned order dated 19.04.2012, the appellant has come up in the present appeal, with a prayer to modify the impugned order and to award the relief as claimed in the complaint, on the grounds that the District Forum ignored the fact that the estimate of the vehicle as prepared by M/s A.B. Motors was to the tune of Rs.23,62,900/- and as per the surveyor, the total estimate of the repair comes to Rs.22,56,475/- and as per GR-8 of India Motor Tariff, in case the repair of the vehicle exceeds 75% of the IDV, then the vehicle has to be considered as total loss. The appellant is entitled to get the IDV of the vehicle and the order under appeal is liable to be modified. The District Forum has also not awarded any interest or compensation and the appellant is entitled to the same. The authority of the Hon'ble Supreme Court, relied upon by the District Forum, is not applicable because it was passed in the year 1983, whereas the India Motor Tariff Regulation came into existence w.e.f. 30.06.2002. The impugned order is against the facts and is liable to be modified.
12. On the other hand, the respondent insurance company has file cross appeal i.e. F.A. No.1291 of 2012 (Bajaj Allianz General Insurance Co.Ltd. Vs. Surinder Pal Mittal), seeking setting aside of the impugned order, on the grounds that the surveyor after going through the estimate prepared by the authorized service centre of Ford to the tune of Rs.22,75,900/-, deducted the necessary deprecation and worked out the net liability as Rs.10,80,175/- on repair basis. The report of the surveyor was never challenged and the respondent insurance company is always ready to pay the amount as per the survey report of the surveyor. The District Forum ordered that the appellant cannot ask for reimbursement of IDV, but also directed the respondent to get the vehicle repaired without any reasons for exempting the appellant from paying the depreciation amount. The impugned order is liable to be set aside.
13. We have gone through the pleadings of the parties, perused the record of the learned District Forum and have heard the arguments advanced by the learned counsel for the parties.
14. Learned counsel for the appellant has contended that the District Forum has ignored the estimate prepared by M/s A.B. Motors Pvt. Ltd. which is authorized agency of the Ford Motors. The surveyor has also assessed the total loss to the extent of Rs.22,75,900/-, but he reduced this amount to Rs.10,80,175/-. It has been contended that the District Forum has also mentioned so, but has ignored the General Regulation-8 of India Motor Tariff. It has been contended that the District Forum has neither awarded the compensation nor the litigation expenses and the impugned order is liable to be modified.
15. Learned counsel for the respondent insurance company has argued that the amount of Rs.10,80,175/- has already been deposited with this Commission. The appellant is ready to pay this amount , but after reducing the amount of the salvage.
16. We have considered the respective submissions advanced on behalf of the parties and have thoroughly scanned the entire record and other material placed on the file.
17. The vehicle in question was insured for a sum of Rs.15,22,565/- for the period 10.12.2009 to 09.12.2010 vide Motor Vehicle Cover Note Ex.C-10/Certificate-cum-Policy Schedule Ex.R-13. The said vehicle met with an accident and the appellant got the estimate prepared from M/s A.B. Motors Pvt. Ltd. Ex.C-6 and the total estimate for repair as per the appellant is Rs.23,62,900/-. The surveyor of the respondent also gave the report Ex.R-6 and calculated the amount of total loss as Rs.22,75,900/-, but later on after making various deductions of parts and labour, salvage, compulsory excess, concluded that the net amount payable was Rs.10,80,175/-.
18. The insured value of the vehicle was Rs.15,22,565/-, whereas the estimate of repair was much more than the IDV of the vehicle. General Regulation-8 of India Motor Tariff deals with provision for total loss and is reproduced as follows:-
GR.8. Insured's Declared Value (IDV) "The Insured's Declared Value (IDV) of the vehicle will be deemed to be the "SUM INSURED‟ for the purpose of this tariff and it will be fixed at the commencement of each policy period for each insured vehicle.
The IDV of the vehicle is to be fixed on the basis of manufacturer's listed selling price of the brand and model as the vehicle proposed for insurance at the commencement of insurance /renewal and adjusted for depreciation (as per schedule specified below). The IDV of the side car(s) and / or accessories, if any, fitted to the vehicle but not included in the manufacturer's listed selling price of the vehicle is also likewise to be fixed.
The schedule of age-wise depreciation as shown below is applicable for the purpose of Total Loss/ Constructive Total Loss (TL/ CTL) claims only. A vehicle will be considered to be a CTL, where the aggregate cost of retrieval and / or repair of the vehicle subject to terms and conditions of the policy exceeds 75% of the IDV."
19. The District Forum has relied upon the authority of the Hon'ble Supreme Court dated 22.07.1983, but the above authority referred by the District Forum of the Hon'ble Supreme Court is not applicable to the facts and circumstances of the present case. The District Forum has altogether lost sight of the Generation Regulations of India Motor Tariff and the law prevailing at present which provides that where the cost of the repair exceeds 75% of the IDV of the vehicle, then it has to be considered as the total loss.
20. The respondent insurance company, instead of making payment of the claim, wrote letters Ex.R-7 to Ex.R-9 and Ex.R-10, asking the appellant to get the vehicle repaired and to produce the original bills. The appellant has also relied upon the similar letter Ex.C4. The respondent insurance company has also ignored the report of its own surveyor, who has estimated the cost of the new parts as Rs.22,75,900/-, but the surveyor also, instead of considering the provisions of GR-8 of India Motor Tariff, further deducted the amounts under various heads, knowing well that it was a case of 'total loss'. The order passed by the District Forum is against the facts, evidence and the law and is required to be modified.
21. In view of above discussion, the appeal filed by the appellant/complainant (F.A. No.730 of 2010) is accepted and the impugned order under appeal dated 19.04.2012 passed by the District Forum is modified and the respondent insurance company is directed to pay the sum insured i.e. Rs.15,22,565/- to the appellant minus the salvage value, which as per report of the surveyor Ex.R-6, is Rs.1.50 lacs. It is made clear that in case, the appellant returns the salvage, then the respondent insurance company shall pay the entire amount above mentioned and in case, he does not return the same, then Rs.1.50 lacs shall be deducted. The respondent insurance company shall also pay interest on the awarded amount @ 7.5% p.a. from the date of repudiation of claim i.e. 18.11.2010 till realization and Rs.5,000/- as litigation expenses.
First Appeal No.1291 of 2012:-
22. In view of the reasons and discussion held in F.A. No.730 of 2012 (Surinder Pal Mittal Vs. Bajaj Allianz General Insurance Co.Ltd.), the F.A. No.1291 of 2012 (Bajaj Allianz General Insurance Co.Ltd. Vs. Surinder Pal Mittal) is dismissed and the impugned order under appeal dated 19.04.2012 passed by the District Forum is modified to the extent mentioned above. No order as to costs.
23. The appellant had deposited an amount of Rs.25,000/- with this Commission at the time of filing of the appeal and another sum of Rs.10,80,175/- vide receipt dated 03.12.2012 in compliance of the order dated October 10, 2012 passed by this Commission. Both these amounts with interest accrued thereon, if any, be remitted by the registry to the respondent/complainant by way of a crossed cheque/demand draft after the expiry of 45 days under intimation to the learned District Forum and to the appellant.
24. Remaining amount as per this order shall be paid by the appellant to the respondent/complainant within 45 days of the receipt of copy of the order.
25. The arguments in both these appeals were heard on 20.03.2014 and the orders were reserved. Now the orders be communicated to the parties.
26. The appeals could not be decided within the stipulated timeframe due to heavy pendency of court cases.
27. Copy of the order be placed in F.A. No.1291 of 2012 (Bajaj Allianz General Insurance Co.Ltd. Vs. Surinder Pal Mittal).
(Inderjit Kaushik) Presiding Judicial Member (Jasbir Singh Gill) Member March 28, 2014.
IInd example:- Ombudsman decision:-
IIIrd example:- Ombudsman decision:-
104, L-1, Ansal Housing, Golf Link-01,
Sector Omega-01, Builders Area, Near Pari Chowk,
Greater Noida, U.P..
201308.
23.04.2017.
Ashok Kumar Singh.
I am sharing one decision-----Very Important & true decision for:-
Constructive Total Loss & Aggregate cost of retrieval and /or repair of the vehicle
A s per Indian Motor Tariff:-
The insured vehicle will be treated as a CTL if the aggregate cost of retrieval and / or repair of the vehicle, subject to terms and conditions of the policy, exceeds 75% of the IDV of the vehicle.
Complaint No.IO(CHN) 11.07.1058 / 2010-11
Award no-IO(CHN)/G/27/2010-11 dated30thJuly2010 (Motor)
MrB.S.Rajasekar
vs
Tata AIG Gen Ins Co Ltd ----------------------------------------------------------
The complainant had insured his car with the above insurance co for a sum insured of rs 2,71,107/-from 25.06.2009 to 24.06.2010 and the car was heavily damaged due to an accidental fire on 14.11.2009.The insurer has agreed to settle the claim on repair basis as assessed by the surveyor for rs1,26,836/ and while assessing the loss the surveyor has applied depreciation on various parts which require replacement.-
The complainant had sought the claim to be settled on the basis of constructive Total loss since the aggregate cost of retrieval and /or repair of the vehicle before applying depreciation on various parts as mentioned in the survey report exceeds 75% of the IDV as per GR8 of the IMT.The insurer had mentioned that the surveyor has assessed the loss on repair basis for rs 1,26,836/- which is within 75%of the IDV and hence the claim could not be considered as a CTL as demanded by the insured.
The insured had stated that he had already depreciated the cost of the vehicle to arrive at the IDV of Rs2,71,107/-and the insurer is again applying depreciation on parts for the purpose of deciding the eligibility for constructive total loss settlement.
The insurer had argued that since the cost of repair or retrieval did not exceed 75% of IDV the claim could not be considered as constructive total loss.They are agreeable for settlement on repair basis.From the records it is observed that there is no dispute in fixing up the IDVfor the vehicle at the time of inception of the policy and only dispute is about the application of depreciation 39 on parts while determining whether the loss has to be assessed on total loss basis or not.
The policy wording state as “The insured vehicle shall be treated as CTL if the aggregate cost of retrieval and /or repair of the vehicle subject to terms and conditions of the policy exceeds 75%of the IDV of the vehicle.”Nothing specific is mentioned about application of depreciation in case TL/CTL and merely mentions “subject to terms and conditions of the policy”This is very vague. Though the insurer has no contractual obligation to accept the insured’s desired mode of settlement ,judging from the severity of damages to the vehicle and also the fact that the cost of retrievel/repairof the vehicle as per estimate exceeds 75%of IDV,the insured is justified in seeking settlement on constructive total loss basis.Considering all the factors the decision of the insurer in considering the claim only on repair basis is not correct and hence they are directed to settle the claim on total loss basis subject to terms and conditions of the policy.
The complaint is allowed.
Thanks, with regards,
Ashok Kumar Singh
Greater Noida, U.P..
201308.
08.08.2017.
9891373920.