Order Date: Not Specified
Order Name: M/S. Aaditya International Vs. New India Assurance Co. Ltd.
Case No.: F.A. No. 694/2017
The National Consumer Disputes Redressal Commission, led by Justice Ram Surat Maurya and Mr. Bharatkumar Pandya, has ruled that insurance companies cannot change policy coverage during renewal without the policyholder’s consent.
### Case Summary
Aaditya International, a fabric dyeing and printing partnership firm, held two insurance policies with New India Assurance Company. One policy covered their stock and fixtures, while the other insured their plant, machinery, and goods. A fire caused by an electric short circuit destroyed their premises, including machinery, stock, and items held in trust. Aaditya International claimed Rs. 75,61,748 for the damages. Despite reluctantly accepting a salvage value of Rs. 65,000, the insurer only paid Rs. 16,59,635 for the plant and machinery, leaving Rs. 15,21,825 unpaid. Additionally, the insurer denied coverage for stock held in trust due to an oversight during policy renewal, resulting in a loss of Rs. 41,12,113. After failing to resolve the issue directly with the insurer, Aaditya International filed a complaint with the State Commission of Haryana, which dismissed the complaint. The firm then appealed to the National Commission.
### Insurer’s Defense
The insurer argued that the renewed policy no longer covered stock held in trust, and therefore, the loss related to such stock was excluded from the claim. They contended that there was no deficiency in their service and requested the dismissal of the complaint.
### National Commission’s Observations
The main issue was whether Aaditya International was entitled to compensation for the loss of stock held in trust. The complainant argued that the renewed policy should have maintained this coverage, as it was included in the previous policy. The insurer maintained that the claim was processed according to the policy terms and that the Court could not alter these terms.
However, the National Commission noted that insurers should not unilaterally change policy coverage during renewal without the policyholder’s consent. This principle has been upheld by the Supreme Court in cases like United India Insurance Company Limited vs. Manubhai Dharmasinhbhai Gajera and Jacob Punnen vs. United India Insurance Company Limited. Consequently, the National Commission allowed the appeal, overturning the State Commission’s dismissal, and directed the insurer to pay Rs. 30,93,021 as assessed by the surveyor, along with 9% interest from the date the claim was approved.
### Takeaway
The ruling emphasizes that insurance companies cannot alter policy terms during renewal without the explicit consent of the policyholder. If you’re renewing your insurance policy, make sure to review the terms carefully and ensure that all necessary coverages are maintained. If any changes are made without your consent, you have the right to challenge them.
For further details, you can read the full order [here]. (Include hyperlink if available)
