NCDRC Orders New India Assurance To Pay Additional ₹1.57 Lakh For Arbitrary Fire Claim Deductions; Terms Assessment Deficient In Service
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC) comprising Justice A.P. Sahi (President) and Mr. Bharatkumar Pandya (Member) has held New India Assurance Company Ltd. liable for faulty claim assessment and failure to justify deductions made by its surveyor in a fire insurance claim dispute. Partly allowing the appeal filed by M/s Khanna Polyrib Pvt. Ltd., the Commission enhanced the compensation by directing the insurer to pay an additional ₹1,57,804 with 8% interest from the date of complaint till the date of payment.
Background
The complainant, Khanna Polyrib Pvt. Ltd., had taken a fire insurance policy from New India Assurance for ₹1.10 crore covering its building, machinery, and generator. In September 2005, a fire broke out in its extrusion plant, leading to extensive damage. The complainant submitted a claim for ₹38.85 lakh. The insurer’s surveyor assessed the loss at ₹8.48 lakh after deducting depreciation and salvage. On objections by the complainant, an investigator reassessed the loss at ₹10.65 lakh, which the insurer offered as full settlement. Dissatisfied, the complainant filed a case before the State Commission seeking ₹23.08 lakh. The State Commission partly allowed the complaint and fixed compensation at ₹18.17 lakh, prompting both parties to appeal before the NCDRC.
Arguments
The complainant argued that the surveyor failed to assess the actual loss and wrongfully excluded the generator and essential spares from the claim. It also contended that the insurer wrongly applied depreciation, as the insured value already reflected asset depreciation.
The insurer defended the deductions and argued that the complaint was unjustified, given that ₹10.65 lakh had already been paid in good faith based on the investigator’s reassessment.
NCDRC’s Findings
The NCDRC dismissed the claim for the generator, noting that it was not part of the original complaint. However, it found merit in the complainant’s argument regarding spares such as welding rods and embossing rolls, which were wrongly excluded from assessment. Their combined value of ₹2.52 lakh was directed to be added to the loss computation. Regarding depreciation, the Commission held that while depreciation was warranted, the insurer failed to justify its calculations or the choice of rates. The Commission applied a uniform 37.5% depreciation to align with reasonable usage expectations for five-year-old machinery. It ruled that the insurer’s conduct amounted to a deficiency in service due to lack of proper justification for deductions and arbitrary assessment.
Final Order
The NCDRC enhanced the total compensation by ₹1,57,804 with 8% interest from the date of filing the complaint until realization. Any default in payment within two months would attract 10% interest. The Commission reiterated that insurers must provide transparent and well-reasoned claim assessments, and that failure to do so constitutes unfair trade practice.
Appearance
For Khanna Polyrib Pvt. Ltd: Mr. Lav Kumar Agrawal, Advocate
For New India Ass. Co. Ltd. & Anr: Mr. J.P.N. Shahi, Advocate
Cause Title: M/s Khanna Polyrib Pvt. Ltd. vs New India Assurance Co. Ltd. & Anr.
Case No: First Appeal No. 272 Of 2015
Coram: Justice A.P. Sahi (President), Mr. Bharatkumar Pandya (Member)
