Pranav B Prem

The District Consumer Disputes Redressal Commission, Baramulla, comprising Peerzada Qousar Hussain (President) and Nyla Yaseen (Member), has held New India Assurance Co. Ltd. liable for arbitrarily under-assessing an insurance claim following a fire incident, without providing any reasonable justification. The Commission directed the insurer to reassess the claim based on the stock and purchase bills submitted by the complainant and to pay the balance amount with 6% interest from the date of claim till realization. Additionally, the insurer was ordered to pay ₹3 lakh as compensation for mental agony and ₹20,000 as litigation costs, with a warning that any delay in compliance would attract 10% penalty interest.

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Background

The complaint was filed under Section 35 of the Consumer Protection Act, 2019 by Rubeena Manzoor, a businesswoman dealing in readymade garments at the main market in Baramulla. Her shop was insured under Policy No. 35120348530600000033, issued by New India Assurance Co. Ltd., valid from 08.05.2023 to 07.05.2024, with a sum insured of ₹15,02,000. A devastating fire on 19.08.2023 destroyed nearly 80% of her stock and furniture, while the remaining 20% was damaged due to water and smoke. The complainant promptly filed an FIR and submitted all relevant documents — including the Fire and Emergency Department’s certificate — to the insurer. Despite the extensive damage and loss estimated at ₹30 lakh, the insurer assessed the claim at only ₹5,31,503, which the complainant accepted under protest. She later approached the Commission alleging deficiency in service and unfair trade practice, stating that the insurer’s conduct caused her severe financial distress and mental agony.

Findings Of The Commission

The Commission noted that the complainant had produced sufficient documentary evidence, including stock and purchase bills, substantiating that her actual loss was significantly higher than what was paid by the insurer. It also found that the insurer failed to justify its assessment or follow a transparent loss evaluation process. Holding the insurer responsible for arbitrary under-assessment, the bench observed that such conduct constitutes both unfair trade practice and deficiency in service under the Consumer Protection Act, 2019. The Commission stated that the insurer had a clear contractual obligation to fairly assess and settle the claim based on the actual loss and supporting documentation submitted by the insured. Failure to do so, it held, amounts to a breach of good faith and contractual duty.

Order

Allowing the complaint partly, the Commission issued the following directions:

1. The insurer shall reassess the complainant’s loss based on the submitted bills and documents and pay the balance amount with 6% interest from the date of claim till realization.

2. The insurer shall pay ₹3,00,000 as compensation for mental agony and harassment.

3. The insurer shall pay ₹20,000 as litigation costs.

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The Commission further held that failure to comply within four weeks would attract penal interest at 10% on the balance amount until realization.

Cause Title: Rubeena Manzoor vs New India Assurance Co. Ltd.

Case No: Consumer Complaint 22/2024

Coram: Peerzada Qousar Hussain (President), Nyla Yaseen (Member)