Vehicle thefts are usually covered by motor insurance, particularly if it includes comprehensive coverage. However, in case a vehicle, say car, gets stolen and gets damaged in an accident caused by the car thief or someone gets injured in the accident, then who will be held liable to pay the compensation in this case-the owner of the car, insurance company or the thief?
Industry experts say liability is on the car thief, though, usually, the insurance company should pay to the owner of the car or the victim who has got injured, and get the subrogation from the car thief. However, there is no standard process for this as it is not a regular case.
"Usually, car insurance claim cases are straightforward. They can be settled easily by looking at the inclusions and exclusions of the policy, the terms and conditions of the policy, and the nature of the incident. Sometimes, there are cases that need to be analysed from multiple perspectives. These are complex cases and there are no standard processes to settle such claims. Therefore, they need detailed scrutiny," says Animesh Das, Head of Product Strategy, Acko General Insurance.
In the above-mentioned case, for instance, the liability should be on the car thief. However, things are not that simple. There will be a thorough investigation of the case. First and foremost, there needs to be a First Information Report (FIR) filed by the car owner and the insurance company needs to be intimated at the earliest.
The insurance company's surveyor will have a detailed look at the FIR and conduct claim verification. Then various questions need to be looked at. For example, was the car owner being negligent in any way while parking the car when it was stolen?
"The crucial documents required will be an FIR, claim application, and the policy document. The case will be analysed from all angles and if all works out well for the car owner, the insurance company will pay the appropriate amount. The insurance company will settle the claim with the car owner and get the subrogation from the car thief. Having said that, there can be multiple points that can come up while the case is being investigated in detail, and the claim will be settled accordingly," informs Das.
Sajja Praveen Chowdary, Head-Motor Insurance, Policybazaar.com, also says that "in the case of accident, the insurer is liable to pay the claim, as the theft claim will be closed. However, a new claim with reference to vehicle damage will be raised by the owner and the insurance company will bear the claim amount as part of the regular policy."
It may, however, be noted that in the case of a theft, the insured or the registered owner is expected to lodge an FIR with the police immediately and inform the insurance company about the same. A claim is registered on the basis of information provided by the insured. However, any insurer pays the claim amount (maximum being the IDV of the vehicle mentioned on the policy during the policy period) against a theft case only when the vehicle remains untraced for a period of time and it receives the NO TRACE REPORT from the police authorities.
"However, in a scenario where the vehicle is recovered by the police, it will be returned to the registered owner. The insurance company must be apprised by the insured/ registered owner/ policyholder about the vehicle recovery wherein the earlier raised claim case is closed. The insurer registers a new claim for any vehicle damages that are found during the theft period with the consent of the policyholder. All such damages are covered under the standard terms and conditions of the policy and the insurer bears the claim amount as part of a regular comprehensive policy," explains Chowdary.
It is, however, important to note that vehicle damage is only covered under a comprehensive plan which includes both OD (Own Damage) + TP (Third Party) component. If the policy is only a TP policy, then vehicle damages are not covered.