The Delhi State Consumer Disputes Redressal Commission has held that repudiation of an insurance claim on the basis of mere assumptions and presumptions, without any cogent supporting evidence, amounts to deficiency in service under the Consumer Protection Act. Dismissing the appeal filed by Oriental Insurance Company Ltd., the State Commission upheld the order directing settlement of the insurance claim in favour of the insured.
The dispute related to a Householder Insurance Policy obtained by the complainant for the period from 24 December 2009 to 23 December 2010. The policy covered various household articles, including gold jewellery valued at ₹18,37,304, based on a valuation report submitted by an approved valuer and accepted by the insurer at the time of issuance of the policy. The complainant paid the requisite premium, and the policy was issued accordingly.
On 7 January 2010, while travelling on his scooter, the complainant lost a pouch containing his wife’s gold jewellery. He immediately lodged a Non-Cognizable Report with the police and informed the insurance company about the incident on the following day. The insurer appointed a surveyor, who assessed the quantum of loss at ₹17,75,520. However, the surveyor expressed doubts regarding the circumstances surrounding the loss and opined that the manner in which the jewellery was allegedly lost did not appear logical or reasonable.
Relying on these observations, the insurance company repudiated the claim on 15 April 2010. The grounds cited included alleged failure to take reasonable care while carrying valuable jewellery, absence of purchase bills, and improbability of the incident as narrated by the complainant.
Aggrieved by the repudiation, the complainant approached the District Consumer Disputes Redressal Commission, which held the insurer guilty of deficiency in service. The District Commission directed the insurance company to pay ₹17,75,520 towards the loss of the insured jewellery, along with interest at 9% per annum from the date of repudiation till realisation, and ₹50,000 towards compensation and litigation expenses.
Challenging this order, the insurer preferred an appeal before the State Commission. It contended that the claim had been rightly repudiated as the complainant failed to exercise reasonable care and had not produced purchase bills to establish ownership of the jewellery. The insurer also relied heavily on the surveyor’s report, arguing that the doubts expressed therein justified rejection of the claim.
The State Commission, however, was not persuaded by these submissions. It observed that the insurance policy covering the jewellery had been issued only after the insurer accepted the valuation report of an approved valuer and collected the premium. Having done so, the insurer could not subsequently question the existence, ownership, or valuation of the jewellery after the occurrence of the loss.
The Commission noted that the complainant had promptly reported the loss to the police and had duly intimated the insurer, thereby complying with the material terms of the policy. It further held that the surveyor’s observations regarding the “logic or reasonability” of the incident were merely opinions based on assumptions and presumptions, unsupported by any concrete evidence.
Relying on settled legal principles, the Commission reiterated that a surveyor’s report is not conclusive and cannot form the sole basis for repudiation unless supported by reliable material. It emphasised that denial of an insurance claim cannot be founded on conjectures or subjective perceptions, particularly when the insurer has failed to produce cogent evidence to disprove the occurrence of loss.
The State Commission concluded that the repudiation of the claim was arbitrary and unjustified, and clearly amounted to deficiency in service. Finding no infirmity in the order passed by the District Commission, it dismissed the appeal and upheld the directions for payment of the claim amount along with interest and compensation. Accordingly, the appeal filed by Oriental Insurance Company Ltd. was dismissed, and the order directing settlement of the insurance claim in favour of the complainant was affirmed.
Cause Title: Oriental Insurance Company Ltd. v. Praveen Kumar Sharma
