H.P. State Commission Holds Oriental Insurance Co. Liable For Repudiating Insurance Claim Solely Due To Delayed Intimation, Orders To Pay Rs. 7.9 Lakhs

Brief Facts:

Mr. Gita Ram Negi (“Complainant”) owned a two-storied house located in the village Sudharang, Tehsil Kalpa, District Kinnaur, Himachal Pradesh. The construction of the house was financed through a loan obtained from the State Bank of India (“SBI”) and the property was insured with Oriental Insurance Company Ltd (“Insurance Company”). Heavy rains and snowfall in June 2013, particularly in the Sudharang area, resulted in floods, land erosion, and slides, due to which the Complainant's house was collapsed in late July 2014. Despite informing about the same by the Complainant to the insurance company, the insurance company repudiated the claim, without appointing a surveyor, and informed the Complainant that the claim was wrongful, illegal, and baseless. Thereafter, the Complainant approached the District Consumer Disputes Redressal Commission, Shimla, Himachal Pradesh (“District Commission”) and filed a consumer complaint against the insurance company and the bank.

In response, the insurance company acknowledged the insurance coverage but contended that the Complainant failed to adhere to the policy's terms and conditions. It argued that the Complainant did not promptly notify them of the loss in June 2013, preventing a timely inspection and the implementation of measures to mitigate further damage to the building. The insurance company denied any deficiency in service or unfair trade practice, seeking the dismissal of the complaint.

The Bank filed a separate reply asserting that upon receiving the Complainant's claim, it promptly communicated with the insurance company and urged for an early settlement of the claim. It argued that there was no deficiency in service or unfair trade practice on its part.

After assessing the violation of the policy's terms and conditions, the District Commission dismissed the complaint. Therefore, the Complainant filed an appeal in the State Consumer Disputes Redressal Commission Shimla (“State Commission”). The State Commission remanded the case back to the District Commission to appoint a surveyor cum-loss assessor. However, the District Commission again dismissed the complaint. Therefore, the Complainant approached the State Commission against the dismissal of the complaint.

Observations by the Commission:

The State Commission noted that in June 2013, due to floods, land erosion, and slides in District Kinnaur, the Complainant's house suffered significant damage. The damage occurred in a series of incidents and the insurance company defaulted in appointing a surveyor on time, due to which the intimation of claim could not be given on the exact time. Given the circumstances and evidence, the State Commission held that the repudiation of the claim based solely on delayed intimation was unlawful. Therefore, the State Commission held the insurance company liable for deficiency in service and unfair trade practice. The State Commission, therefore, dismissed the decision of the District Commission.

Subsequently, the State Commission directed the insurance company to pay a total sum of Rs. 7,90,000/- to the Complainant. It was also directed to disburse an additional amount of Rs. 50,000/- as litigation costs to the Complainant.

Case Title: Gita Ram Negi vs The Oriental Insurance Company Ltd and others

Case No.: First Appeal No. 175/2022

Advocate for the Complainant: Bhag Chand Sharma

Advocate for the Respondent: Lalit K. Sharma