If you are stuck in such a situation, here is what to do.

Mr. Sameer Verma, a resident of Avanti Nagar, recently decided to renew his car insurance policy. He chose to continue with his existing insurer, “OmniSecure Insurance Ltd.,” and completed the process through their official website. The company provided him with a quotation that clearly mentioned a No Claim Bonus (NCB) of 25%. Believing this to be correct, Mr. Verma paid the quoted premium, and the policy was issued to him.

Approximately one month later, he received an unexpected message from OmniSecure Insurance. The message stated that after an internal verification, his eligible NCB was only 20%, not the 25% they had initially offered. Consequently, the company demanded an additional payment to ensure his policy remained active. When Mr. Verma contacted their customer service, the representative merely reiterated the contents of the message. He argued that the quotation was generated by their system and offered by their salesperson, and thus, the error and liability should rest with the company, not him. He questioned the legality of altering the terms of an already issued and paid-for policy. This situation left him seeking clarity on his legal rights and options.

Advice in such cases

If you find yourself in a similar predicament, it is crucial to act systematically and protect your interests.

• Review all your documents, including the initial quotation, the payment receipt, and the final policy document. Check for any clauses that might allow the insurer to amend terms post-issuance.
• Communicate with the insurance company exclusively in writing. Send a formal email detailing the issue, attaching the initial quotation and the policy document. This creates a paper trail.
• Do not pay the additional amount demanded by the company, as it might be construed as your acceptance of the new terms.
• File a formal grievance with the insurance company’s designated grievance redressal officer.
• If the issue is not resolved, you can escalate the complaint to the Insurance Ombudsman.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

This issue is primarily governed by contract law and consumer protection regulations rather than criminal statutes like the Bharatiya Nyaya Sanhita (BNS).

• Indian Contract Act, 1872: A valid contract is formed when there is an offer (the quotation), acceptance (your payment), and consideration (the premium). Once the policy is issued, the insurer cannot unilaterally change its fundamental terms, like the premium amount, without your consent. Doing so amounts to a breach of contract.
• Insurance Act, 1938 and IRDAI Regulations: The Insurance Regulatory and Development Authority of India (IRDAI) has laid down strict guidelines to protect policyholders. The IRDAI (Protection of Policyholders’ Interests) Regulations, 2017, prohibit insurers from engaging in unfair practices. Altering terms after policy issuance without a valid, legally permissible reason can be considered an unfair trade practice.
• Consumer Protection Act, 2019: An insurance policy is a service. Demanding extra payment after the contract is concluded, based on the insurer’s own error, constitutes a “deficiency in service” and an “unfair trade practice” under this Act. You can file a complaint in the appropriate consumer commission.

If you are the complainant

As the complainant, you need to build a strong case against the insurance company.

• Gather all relevant evidence: the initial quotation, payment receipts, the policy schedule showing the 25% NCB, and all communications (SMS, emails) from the insurer.
• Send a formal legal notice to the insurance company through your lawyer, demanding they honour the original policy terms or face legal action.
• File a complaint with the IRDAI’s Integrated Grievance Management System (IGMS) online.
• If the grievance is not resolved to your satisfaction, file a complaint with the Insurance Ombudsman in your jurisdiction. This is a cost-effective and relatively quick method of dispute resolution.
• Simultaneously or alternatively, you can file a complaint before the District Consumer Disputes Redressal Commission for deficiency in service and claim compensation for the harassment.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

As the policyholder who has been wronged, it is important to assert your rights.

• Do not be intimidated by the insurance company’s demands. The principle of ‘promissory estoppel’ may apply here, which prevents a party from going back on a promise that the other party has acted upon.
• Maintain a clear and chronological record of all events and communications.
• Insist that all further communication from the insurer be in writing to avoid any ambiguity.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police have no jurisdiction in such matters. This is a civil dispute arising out of a contract and does not involve any criminal offence. The police will not register an FIR for a breach of contract or deficiency in service. The appropriate forums for resolving such disputes are the Insurance Ombudsman and the Consumer Courts.

FAQs people normally have

• Can an insurance company change the terms after issuing a policy?
  No, an insurer cannot unilaterally change the core terms and conditions, such as the premium or NCB, after the policy has been issued and the premium has been paid, especially if the change is due to their own error.
• Is the initial quotation legally binding?
  The quotation is an ‘invitation to offer’ or an ‘offer’. Once you accept it by paying the premium, and the insurer accepts your payment by issuing the policy, it becomes a binding contract on those terms.
• What if my policy lapses because I don’t pay the extra amount?
  If the insurer cancels your policy for non-payment of the unfairly demanded amount, you can challenge this cancellation as illegal and seek reinstatement of the policy and compensation.
• What is the role of the Insurance Ombudsman?
  The Ombudsman is an impartial authority that resolves disputes between policyholders and insurance companies. Their decision is binding on the insurer if the policyholder accepts it.

What evidence is required?

To build a strong case, you will need the following documentary evidence:

• The initial quotation document or screenshot clearly showing the 25% NCB.
• Proof of premium payment (bank statement, payment confirmation email, or receipt).
• The policy schedule that was first issued to you.
• The SMS, email, or letter from the insurer demanding the additional payment.
• Copies of all written communication you have had with the insurer regarding this issue.
• A copy of the legal notice sent, if any.

How long will the investigation take?

The timeline for resolution can vary depending on the forum you choose:

• Insurance Company’s Grievance Cell: They are typically required to respond within 15 days.
• Insurance Ombudsman: The process usually takes between 1 to 3 months to get a final award.
• Consumer Court: This can be a longer process, potentially taking anywhere from 6 months to a couple of years, depending on the court’s workload and the complexity of the case.

Advocate Sudhir Rao, Supreme Court of India