Insurer Cannot Dismiss Claim Based On Mere Speculation: NCDRC Holds United India Insurance Liable For Deficiency In Service

Brief Facts of the Case

The Complainant insured 400 trolleys of Mustard Husk for Rs. 21,00,000 with the United India Insurance/insurer and paid a premium of Rs. 12,514. After a fire, the Complainant notified the insurer's agent, who advised contacting the fire brigade and police. Despite notifying the insurer and filing a legal notice, no action was taken until the insurer eventually conducted a survey. However, the claim was not paid. The complainant filed a complaint before the State Commission of Rajasthan, which allowed the complaint. The State Commission partially upheld the complaint, directing the insurer to pay Rs. 1,00,000 with 9% interest from the date of the complaint, plus Rs. 10,000 for mental agony. The Commission found the insurer's refusal based on self-combustion claims was not substantiated, and the survey report's findings were deemed valid. Aggrieved, the complainant filed an appeal before the National Commission.

Contentions of the Insurer

The insurer argued that after being notified of the fire, it appointed a Surveyor who found that the complainant failed to provide complete documents for the Mustard Husk, submitting only a purchase agreement. The complainant stated that the Mustard Husk was stored in an open field under a plastic sheet and attributed the fire to spontaneous combustion, an excluded peril under the policy. The insurer noted that the complainant did not contest the Surveyor's findings or deny the spontaneous combustion. They referenced an article stating that spontaneous combustion without ignition is not considered fire under the policy terms. The State Commission's order was criticized for not addressing the Surveyor's findings and dismissing the spontaneous combustion defence without sufficient evidence. The insurer also claimed the complainant fabricated documents and failed to provide purchase and sale bills or evidence of the Mustard Husk's quantity and cost.

Observations by the National Commission

The National Commission observed that the insurer emphasized a statement from the complainant suggesting the Mustard Husk might have caught fire due to internal heat, arguing this indicated self-combustion and, thus, no claim was admissible. However, the Commission found this statement insufficient to reject the claim entirely, considering it speculative and an innocuous response to the Surveyor's suggestion. The delayed visit of the Surveyor and the winter timing, which made spontaneous combustion unlikely, were also noted. The Commission found the complainant's statements and affidavits insufficient to prove the claim of burning 40-50 trucks of Mustard Husk valued at Rs. 30 lakhs. The lack of specific documentation, such as receipts or vouchers, undermined the claim. The rental receipts and other documents provided were not close enough to the date of the fire to reliably assess the quantity of Mustard Husk burned.

The National Commission upheld the State Commission's decision with modifications and assessed the compensation at Rs. 1 lakh.

Case Title: Dayaram Meena Vs. United India Insurance Co. Ltd.

Case Number: F.A. No. 429/2017