Boundary Wall Is Integral Part Of Building, Not Specifically Excluded, Covered Under Insurance Policy: Uttarakhand State Commission

Brief Facts:

The dispute relates to a Standard Fire and Special Perils Policy (“Policy) taken by M/s Negi Digital (“Complainant”) for the year 2011-2012, from United India Insurance Co. Ltd. (“Insurance Company”). Heavy rainfall caused a flood, leading to the collapse of the boundary wall of the insured property of the Complainant. The Complainant claimed the insurance amount from the Insurance Company, which initially rejected the claim asserting that the boundary wall was not covered under the policy. As a result, the Complainant filed a complaint in the District Consumer Disputes Redressal Commission, Dehradun (“District Commission”), which ruled in favour of the Complainant. Aggrieved by the order of the District Commission, the Insurance Company filed an appeal in the State Consumer Disputes Redressal Commission, Uttarakhand (“State Commission”) arguing that the boundary wall wasn't covered in the policy and no extra premium was paid for it.

The Complainant contended that the boundary wall was an integral part of the insured building and therefore should be covered under the policy issued by the Insurance Company. They argued that the policy should extend its coverage to include not only the main building but also ancillary structures such as boundary walls. Further, the Complainant maintained that the cause of the property damage was excessive rain and water overflow, leading to the collapse of the boundary wall. They relied on the surveyor's report, which explicitly stated that the damage was caused by these specific factors, to substantiate their claim.

On the other hand, the Insurance Company contended that the policy did not explicitly cover the boundary wall, and no additional premium had been paid to include it in the coverage. They argued that the boundary wall was not part of the description of the property covered by the policy. The Insurance Company asserted that the cause of loss, which was excessive rain and water accumulation leading to the collapse of the boundary wall, fell outside the scope of insured perils. They maintained that these specific factors were not covered by the policy and thus rejected the claim.

Observations of the Commission:

The State Commission acknowledged that there was no dispute with respect to the fact that in order to insure his building, the Complainant had purchased a policy from the Insurance Company. The policy description did not explicitly exclude the boundary wall from coverage, and the State Commission opined that certain structures, such as boundary walls, are integral to the coverage of a building. The State Commission also referred to the landmark case of Oriental Insurance Co. Ltd. vs. M/s J. K. Cement Works AIR 2020 Supreme Court 921, wherein the Supreme Court clarified that damage caused by heavy rainfall falls within the 'flood and inundation' clause of insurance policies.

Additionally, the State Commission highlighted that the policy's terms and conditions included coverage for flood and inundation. It reasoned that the absence of an explicit mention of the boundary wall in the policy description did not automatically mean exclusion, as the coverage was determined by the terms and conditions set forth in the policy itself.

The State Commission held that the Complainant's claim for the damage to the boundary wall due to flood was valid and covered under the insurance policy. Consequently, it upheld the judgment of the District Commission, ruling in favour of the Complainant and obligating the Insurance Company to indemnify the loss incurred to the boundary wall. The Insurance Company Limited (UIICL) was ordered to pay compensation of Rs 5 lakh to the Complainant and the appeal was dismissed.

Case: United Insurance Company Ltd. vs M/s Negi Digital & another

Case No.: A/173/2018

Advocate for the Complainant: Mr. Rajesh Devliyal

Advocate for the Respondent: Mr. Gandharv Matta

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