Order Date: Not Mentioned
Order Name: West Bengal State Electricity Distribution Company Ltd. Vs. National Insurance Company Ltd.
Case No.: C.C. No. 409/2020
The National Consumer Disputes Redressal Commission, led by Mr. Binoy Kumar and Justice Sudip Ahluwalia, has ruled that denying an insurance claim without prior notice or sharing the survey report is considered deceptive.
Brief Facts of the Case
A government company, the complainant, had taken a machinery insurance policy from National Insurance Company. This policy covered their plant and machinery for a sum assured of Rs. 25,91,04,226 with a premium of Rs. 3,87,307. During the startup of a unit, significant noise and vibrations were detected, leading to the machine shutting down due to high water levels and PRV leakage. Inspections showed abnormal pressure readings, rendering the machine non-operational. The complainant reported the damages and requested a surveyor. Despite repeated communications, the insurer repudiated the claim. Subsequently, the complainant filed a complaint with the National Commission, seeking Rs. 2,63,19,430 with 18% interest from the claim submission date, totaling Rs. 3,93,76,75, along with Rs. 10 lakhs for harassment caused by delayed processing and Rs. 5 lakhs for legal and incidental expenses.
Insurer’s Arguments
The insurer contended that the complainant failed to provide necessary documents despite multiple reminders, as highlighted in the Surveyor’s Report. They argued that this non-cooperation hindered a fair assessment of the loss. The insurer also pointed out that Clause 6 of the Policy specifies that no liability exists if notice and completed claim forms are not received within 14 days of the incident, and if the damaged item continues to operate without proper repairs. The claim form and documents were submitted after the Survey Report, absolving the insurer of liability. They cited the Supreme Court’s decision in Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd., which calls for strict interpretation of insurance policy terms.
Observations by the National Commission
The National Commission noted that although the complainant did not submit the claim form within the specified period, a letter of intimation from the Chief Engineer to the insurer indicated substantial compliance with the policy requirements. The insurer acted on this intimation and convened a joint meeting without rejecting the claim at that stage. Moreover, the last reminder sent via speed post was received by the complainant. The Commission found the insurer’s later decision to repudiate the claim without warning or providing the survey report to be evasive.
Decision
The Commission allowed the complaint and directed the insurer to conduct a final survey based on the documents submitted by the complainant. The claim should be decided on its merits within 90 days, with each party bearing its own costs.
Takeaway
This case highlights the importance of insurers providing clear communication and transparency when dealing with claims. It underscores that denying claims without proper notice or sharing necessary reports can be deemed deceptive and lead to adverse legal consequences.
