Delay In Settling Insurance Claim: NCDRC Holds Oriental Insurance Liable For Deficiency In Service
The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker held Oriental Insurance liable for deficiency in service over wrongful repudiation and delay in settling the insurance claim amount.Brief Facts of the Case The complainant insured their ferro alloy production unit with Oriental Insurance under a Standard Fire and Special Perils...
The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker held Oriental Insurance liable for deficiency in service over wrongful repudiation and delay in settling the insurance claim amount.
Brief Facts of the Case
The complainant insured their ferro alloy production unit with Oriental Insurance under a Standard Fire and Special Perils Policy, covering material damage. During the policy period, an explosion occurred in a furnace, causing severe damage. A preliminary surveyor observed molten material scattered near the furnace, suggesting an explosion. The complainant submitted repair costs and documents, claiming Rs. 73,36,456. The insurer's final surveyor assessed the loss at Rs. 52,87,720 but denied liability, attributing the damage to negligence. The complainant filed a case before the State Commission of Orissa, which ordered the insurer to pay Rs. 52,87,720 with interest, along with Rs. 20,000 as litigation costs. Consequently, the insurer appealed before the National Commission.
Contentions of the Insurer
The insurer argued the damage was not caused by an explosion but due to operational issues, such as electrode failure or chemical reactions, leading to cracks in the furnace lining. They claimed the loss was not covered under the policy and denied giving consent for repairs. The insurer maintained that the claim was barred by limitation, as the incident occurred long before the complaint was filed. They relied on the surveyor's report, which indicated no explosion, and emphasized that the report of an IRDA-approved surveyor must be considered conclusive. They further contended that the complainant failed to take proper care, leading to the incident.
Observations by the National Commission
The National Commission reviewed the evidence and found that the furnace damage was caused by an explosion, which is a covered peril under the policy. It rejected the insurer's claim that the damage resulted from negligence or operational failure, as the surveyor's report failed to reconcile the presence of molten material scattered around the furnace. The commission highlighted that the preliminary surveyor observed signs consistent with an explosion, including ejected material, which the final surveyor overlooked.
The commission relied on New India Assurance Co. Ltd. v. Zuari Industries Ltd. to hold that the proximate cause of the damage, being an explosion, mandated coverage under the policy. It emphasized that negligence, even if established, would not exempt the insurer from liability. The commission upheld the State Commission's order and dismissed the appeal.
Case Title: Oriental Insurance Co. Ltd Vs. M/S. Hind Metals & Industries (P) Ltd
Case Number: F.A. No. 1196/2018