Baramulla District Commission Holds New India Assurance Co. Liable For Arbitrary Under-Assessment Of Insurance Claim
Pranav B Prem
The District Consumer Disputes Redressal Commission, Baramulla, has pulled up New India Assurance Co. Ltd. for arbitrarily under-assessing an insurance claim despite overwhelming evidence of loss. The Bench of President Peerzada Qousar Hussain and Member Nyla Yaseen directed the insurer to reassess the loss of the complainant, Rubeena Manzoor, and awarded ₹3 lakh as compensation for mental agony and ₹20,000 as litigation costs, in addition to ordering interest on the balance claim amount.
Background
The complainant, a resident of Baramulla, was running a readymade garments shop in the main market at Dangiwacha. She had borrowed money from individuals and financial institutions to set up her business and had insured the shop with the New India Assurance Company under Policy No. 35120348530600000033, valid from 08.05.2023 to 07.05.2024, with a sum assured of ₹15,02,000 against a premium of ₹3,661.
On the night of 19–20 August 2023, a devastating fire engulfed the shop, destroying 80% of the goods and furniture, while the remaining stock was damaged due to water, heat, and smoke. The complainant claimed that her total loss was not less than ₹30 lakh, including furniture and fittings. An FIR was registered, and a Fire and Emergency Department report confirmed the incident. Despite submission of all requisite documents—including the FIR, Fire and Emergency Certificate, and stock/purchase bills—the insurer assessed the loss at only ₹5,31,503. The complainant received this amount under protest, terming it inadequate and arbitrary. She argued that the insurer’s conduct amounted to breach of contract, deficiency in service, and unfair trade practice under the Consumer Protection Act, 2019.
Proceedings before the Commission
The insurer failed to appear despite notice, and was proceeded ex parte. The complainant adduced evidence including:
Her own affidavit and that of her husband, Ajaz Ahmad Najar, both confirming that the shop and its goods were completely destroyed in the fire, causing losses of around ₹30 lakh.
Testimony of Towseef Ali Mir, Branch Manager of J&K Bank, Dangiwacha, who confirmed that the complainant had taken loans to run her shop, that the bank had hypothecated the stock as security, and that her account was running smoothly up to May 2023
The Commission also examined the Fire and Emergency Certificate and purchase bills, which clearly showed that the actual loss far exceeded the amount assessed by the insurer.
Commission’s Findings
After examining the evidence, the Bench observed that the complainant had substantiated her losses with reliable documents. It noted that the insurer was under a legal obligation to assess the loss judiciously and redress the complainant’s grievance. Instead, it had arbitrarily restricted the claim to ₹5,31,503. The Commission remarked: “Under-assessment and underpayment amounts to unfair trade practice as well as deficiency in service on the part of the Opposite Party. The loss assessed by the OP and the amount restricted to ₹5,31,503 is arbitrary and unjustified, as the complainant has suffered substantial loss of her insured shop.”
Reliefs Granted
The Commission partly allowed the complaint, issuing the following directions:
The insurer must reassess the loss of the insured shop on the basis of stock bills and other documents submitted and pay the balance claim amount, along with 6% interest from the date of claim till realisation.
The insurer must pay ₹3,00,000 as compensation for mental agony and harassment.
The insurer must also pay ₹20,000 as litigation costs.
In case of default, the balance insurance amount will carry penalty interest at 10% until realisation.
The insurer has been directed to comply with the order within four weeks from the date of pronouncement, i.e., 27 August 2025. The complaint was accordingly allowed.
Case Title: Rubeena Manzoor V. New India Assurance Co. Ltd.
Case Number: Consumer Complaint 22/2024
Coram: Peerzada Qousar Hussain [President], Nyla Yaseen [Member]
