The cause of action for an insurance claim is the grievance

Prabodh Kothari had an Oriental Insurance householder's policy. In a housebreaking case, Kothari lost items worth Rs 18.16 lakh, including jewellery worth Rs 16.96 lakh. After Kothari filed a claim, CP Mehta & Co, the surveyor appointed by the insurance company, reported the loss included items worth Rs 13.38 lakh belonging to Kothari's wife. It added this amount could not be considered, as she was not the insured under the policy. The insurance company agreed to pay only a paltry sum of Rs 31,186.

Subsequently, Kothari filed a consumer complaint against the insurance company and the surveyor before the Mumbai District Forum. The forum said under a householder's insurance policy, the items of all family members were covered. Therefore, the jewellery belonging to Kothari's wife, listed in the policy taken by her husband, would be covered. Accordingly, it directed the insurance company to pay an additional Rs 13.38 lakh.

After an appeal by the insurance company, the Maharashtra State Commission said the complaint was time-barred, as the limitation would be considered from the date of the 'cause of action'- the date when the burglary took place. The commission added there was no deficiency in service, as the initial First Information Report (FIR) lodged with the police didn't include the jewellery belonging to Kothari's wife. Therefore, it set aside the forum's order and dismissed the complaint.

Then, Kothari approached the National Commission. His lawyer,

A A Pirani, argued the limitation wouldn't be considered from the date of the burglary but from the date the claim was repudiated. In this case, though the burglary took place in 2001, part of the claim for the jewellery was repudiated by a letter dated December 4, 2006. To arrive at the limitation, the initial date to be considered would, therefore, be December 4, 2006. As the complaint was filed two years after this, it would be within the limitation.

The commission said the term 'cause of action' was a 'bundle of facts' entitling a person to legal proceedings. For an insurance claim, it would first arise when the incident of loss occurred. The 'bundle of facts' includes the process of assessment of the loss and the admission or rejection of the claim, either wholly or partly. So, the cause of action would arise again when the claim is rejected. Therefore, the commission concurred with the arguments of Kothari's advocate, saying the limitation would commence from December 4, 2006, when the claim was partly rejected. It also said the state commission had overlooked the repudiation letter and arrived at an erroneous conclusion.

The National Commission said though the initial FIR didn't record the loss of the jewellery of Kothari's wife, it was later included and was part of the police investigation. The contract of insurance was a 'householder's insurance policy' that covered various risk heads, including fire and housebreaking. The coverage was for the entire household; it wasn't restricted to an individual. Therefore, the claim for jewellery belonging to Kothari's wife, included in the policy taken by her husband, would be payable, it said.

Accordingly, the National Commission set aside the order of the state commission and restored the order of the district forum, directing the insurance company to pay an additional amount of Rs 13.38 lakh for the loss of the jewellery.

The cause of action for an insurance claim is the grievance about its rejection; therefore, limitation is computed from the date when the claim is repudiated. Also, a claim cannot be simply rejected on the grounds that the loss isn't included in the initial FIR; what is necessary is it should form a part of the police complaint and the investigation. The benefits of a householder's insurance policy extend to the entire family and cover all the items included in the policy.