Uttarakhand State Commission Upholds Order Against New India Assurance for Wrongful Rejection of Landslide Claim
Pranav B Prem
The Uttarakhand State Consumer Disputes Redressal Commission, presided over by Ms. Kumkum Rani and Mr. C.M. Singh, has upheld the order of the District Commission, holding New India Assurance Company Ltd. liable for deficiency in service in wrongfully repudiating an insurance claim for a house destroyed by landslide.
Background and Facts
The complainant had availed a loan from a bank for the construction of a house, which was insured with New India Assurance under a Standard Fire and Special Perils Policy for a sum of ₹50,000. The policy also included an add-on cover for earthquake (fire and shock), for which a separate premium was paid. In July 2016, due to heavy and continuous rainfall, a landslide occurred, resulting in the complete destruction of the insured house. The complainant promptly informed the local authorities and the bank about the incident. The bank, in turn, notified the insurer. However, the insurer neither arranged for a site survey nor processed the claim. Instead, the claim was subsequently rejected, causing the complainant significant mental and financial distress.
Aggrieved by the insurer’s inaction and rejection of the claim, the complainant approached the District Consumer Disputes Redressal Commission, alleging deficiency in service. The District Commission allowed the complaint, directing the insurer to pay the insured sum of ₹50,000, along with ₹2,000 for mental and financial loss, and ₹1,000 as litigation costs. Challenging this order, New India Assurance filed an appeal before the State Commission.
Contentions of the Insurer
New India Assurance denied all allegations of deficiency in service. The insurer contended that the claim was reported belatedly and that the loss was not covered under the policy. It was argued that the damage was caused by continuous rainfall, which, according to the insurer, was not a covered peril. The insurer maintained that only earthquake-related damage was covered under the policy, and since the complainant had delayed in informing the insurer and the loss was outside the policy terms, there was no deficiency in service.
Findings and Observations of the State Commission
The State Commission undertook a detailed examination of the insurance policy and the facts of the case. It noted that the policy issued to the complainant was a Standard Fire and Special Perils Policy, with an additional cover for earthquake (fire and shock). The Commission specifically referred to the section of the policy titled “Policy Coverage and Perils Covered,” which clearly included “subsidence/landslide including rockslide” as a covered peril under the main policy. The earthquake-related risks were listed separately under the add-on cover.
The Commission found the insurer’s argument that only earthquake-related damage was covered to be incorrect and misleading. It observed that the destruction of the house was due to a landslide caused by heavy rainfall, which squarely fell within the scope of “subsidence/landslide” as covered by the policy. The Commission stated that the insurer’s repudiation of the claim was therefore not justified.
On the issue of delay in intimation, the Commission found that the complainant had promptly informed the local authorities and the bank, and the bank had notified the insurer. The Commission held that there was no unreasonable delay attributable to the complainant that could justify the rejection of the claim.
The State Commission concluded that the insurer had failed to fulfill its contractual obligations and had wrongfully denied the claim, amounting to clear deficiency in service. The Commission observed that the insurer’s conduct in neither arranging a site survey nor processing the claim, and then repudiating it on untenable grounds, was unjustified.
In view of these findings, the State Commission dismissed the appeal filed by New India Assurance and affirmed the order of the District Commission. The insurer was directed to pay the insured sum of ₹50,000, ₹2,000 for mental and financial loss, and ₹1,000 as litigation costs to the complainant.
Appearance
For Appellant: Smt. Savita Sethi, Advocate
For Respondents: Sh. Pradeep Bartwal, Advocate
Cause Title: New India Assurance Company Limited V. Sh. Rajender Singh
Case No: SC/5/A/13/310
Coram: Ms. Kumkum Rani [President], Mr. C.M. Singh [Member]
