Order Name: National Insurance Co. Ltd. Vs. M/S. Geekay International Co.
Case No.: F.A. No. 870/2021
The National Consumer Disputes Redressal Commission, under the leadership of AVM J. Rajendra, has held the National Insurance Company responsible for providing deficient service. The insurer denied a claim by arguing that the damage caused by excessive rainfall was not covered under their flood policy.
Understanding the Case
A complainant had bought a Standard Fire and Special Perils insurance policy from National Insurance Company Limited. This policy was meant to cover stock stored in a rented building. After heavy rains led to water damage and a partial building collapse, the complainant informed the insurer. A surveyor was sent to assess the damage. However, the insurer rejected the claim, stating that while the policy does cover flood and inundation, it does not cover damage from heavy rain. Dissatisfied, the complainant took the issue to the State Commission of Maharashtra, seeking a ruling on the insurer’s deficiency in service, along with compensation for the loss and mental distress. The State Commission partially agreed with the complainant, finding the insurer guilty and ordering them to pay Rs. 46,48,565 plus 9% interest per annum, Rs. 1 lakh for mental harassment, and Rs. 25,000 for costs. The insurer then appealed to the National Commission.
Insurer’s Argument
The insurer claimed that the loss due to heavy rains was not covered under the Standard Fire and Special Perils Policy. They argued that the complainant did not provide enough proof to show that the loss was covered by the policy. Additionally, they questioned the relevance of the case law cited by the complainant and the validity of the State Commission’s decision.
National Commission’s Observations
The National Commission focused on whether the loss from heavy rain was covered under the Standard Fire and Special Perils Policy. The policy terms include coverage for risks such as storm, cyclone, and inundation. The commission referenced the Supreme Court’s decision in Oriental Insurance Company Limited vs. J.K. Cement Works, which clarified that "flood" includes significant water overflow, and "inundation" covers both flooding and its results. They also referred to Vaibhav Dyestuff Industries vs. New India Insurance Co. Ltd., which supported the claim based on surveyor observations and evidence. Thus, the commission upheld the State Commission’s order and dismissed the insurer’s appeal.
Practical Takeaway
This judgment emphasizes that policyholders should carefully review their insurance policy terms, especially regarding coverage for natural disasters like floods and heavy rains. It also highlights the importance of providing substantial evidence to support insurance claims and the role of consumer forums in ensuring fair treatment by insurance companies.
