Failure To Settle Legitimate Fire Insurance Claim Based On Presumptive Survey Report Is Deficiency In Service: Kupwara Consumer Commission
Pranav B Prem
The District Consumer Disputes Redressal Commission, Kupwara, comprising Peerzada Qousar Hussain, President, and Nyla Yaseen, Member, has held Oriental Insurance Company Ltd. guilty of deficiency in service and unfair trade practice for failing to settle a genuine fire insurance claim. The Commission observed that the insurer neither settled the claim nor repudiated it on valid grounds and instead relied on a surveyor’s assessment based on “presumptions and assumptions,” despite the occurrence of the fire and the resultant loss being clearly established.
The complaint was filed by Gh Nabi Reshi, proprietor of M/s Fashion Foot Wear, Kupwara. The complainant had insured his shop with Oriental Insurance Company Ltd. for a sum assured of ₹11 lakh for the period from 6 March 2015 to 5 March 2016. During the intervening night of 18–19 May 2015, a devastating fire broke out in the shop, completely gutting the premises and destroying the entire stock and furniture. An FIR was lodged with the local police, and the Fire and Emergency Services visited the spot, confirming the incident.
Upon intimation of the loss, the insurer deputed a surveyor to assess the damage. According to the complainant, although all requisite documents were provided, the surveyor assessed a meagre amount of loss without properly considering the documentary evidence. Aggrieved by the assessment, the complainant engaged a private surveyor, who assessed the total loss at ₹14,52,854. It also came on record that the shop was additionally insured by SBI Kupwara for a loan amount of ₹5 lakh, resulting in a total insurance cover of ₹16 lakh under two separate policies. The complainant clarified that he had not claimed compensation under the bank’s policy and had pursued the claim only under the policy issued by Oriental Insurance.
Despite submitting all documents, including GST and VAT bills, registration papers, and correspondence sought by the insurer, the complainant alleged that Oriental Insurance neither settled the claim nor repudiated it formally. According to the complainant, the prolonged inaction and unreasonable stand of the insurer left him without any source of livelihood and compelled him to approach the Consumer Commission for redressal.
The insurer contested the complaint, contending that the claim had been repudiated as “no claim” on the ground that the complainant failed to submit requisite documents despite repeated requests. It was further alleged that the complainant had submitted false bills, violated policy conditions, and had taken multiple insurance policies with mala fide intent. The insurer also pointed out alleged discrepancies in the rent deed and business particulars and denied any deficiency in service.
After considering the pleadings and evidence, the Commission noted that it was undisputed that the shop was insured with Oriental Insurance and that the fire incident occurred during the subsistence of the policy. The Commission observed that the FIR was duly lodged, fire services had visited the site, and the occurrence of the fire and the resulting loss stood clearly established.
The Commission found that although the complainant had cooperated with the survey process and submitted the documents demanded, the insurer neither settled the claim nor repudiated it on cogent and justifiable grounds. It held that the assessment made by the insurer’s surveyor was based largely on presumptions and assumptions rather than documentary evidence. The Commission emphasised that insurers are under a legal duty to assess claims judiciously and fairly on the basis of material placed on record.
Relying on the Supreme Court’s decision in Amalendu Sahoo v. Oriental Insurance Co. Ltd. (2010) 4 SCC 536, the Commission reiterated that insurance contracts must be interpreted reasonably and practically, and that a claim cannot be rejected merely for non-submission of some documents when the occurrence of loss is otherwise proved through evidence. The Commission held that non-settlement of the claim despite receipt of claim intimation and requisite documents amounted to deficiency in service as well as unfair trade practice.
Accordingly, the complaint was allowed. The Commission directed Oriental Insurance Company Ltd. to jointly pay a sum of ₹10,00,000 to the complainant along with interest at the rate of 5% per annum from the date of institution of the complaint till realization. The insurer was further directed to comply with the order within four weeks from the date of receipt of the order.
Cause Title: Gh Nabi Reshi v. Oriental Insurance Company Ltd. & Anr.
Case No.: 27/2016
Coram: President Peerzada Qousar Hussain and Member Ms. Nyla Yaseen
