Surveyor Assessments Should Adhere To Insurance Act's Code Of Conduct: NCDRC

Brief Facts of the Case

The complainant borrowed Rs.1.11 Crore from Allahabad Bank for his poultry farm, which was insured under a fire policy with National Insurance Company/insurer. A fire incident destroyed the entire administrative building, including records and furniture. The complainant promptly informed the police, fire brigade, and the insurer and filed a claim. Despite completing all formalities and requesting a settlement, the insurer did not respond. Later, the complainant discovered that Rs.8,67,165 had been deposited into his loan account by the insurer without prior notice or explanation. Dissatisfied with this, he filed a Consumer Complaint before the District Forum, which allowed the complaint. The District Commission directed the insurer to recognize the surveyor's assessed damages of Rs.10,81,923 as valid. They found it appropriate to pay the complainant an additional Rs.2,14,758, along with 9% annual interest. Additionally, they approved Rs.10,000 for mental agony and litigation costs. Aggrieved by this, the insurer appealed to the State Commission of Uttar Pradesh, which allowed the appeal. Consequently, the complainant filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer acknowledged the validity of the policy period and the occurrence of the fire incident, along with the complainant's claim. They argued that a surveyor was appointed to investigate the incident, and based on the surveyor's findings, Rs.8,67,165 was deposited into the complainant's bank account. The insurer denied any arbitrary action in making this deposit and asserted that the complaint should be dismissed.

Observations by the National Commission

The National Commission observed that the main issue was determining the appropriate compensation under the insurance policy for the loss claimed by the Complainant. It was undisputed that the Petitioner had filed a claim for a fire incident during the policy period, citing a total loss of Rs.24,32,000 as assessed by the Valuer Engineer. The insurer appointed a surveyor whose report valued the loss at Rs.8,67,165. The Commission referred to legal precedents such as Sri Venkateshwara Syndicate Vs. Oriental Insurance Company Limited (2009) 8 SCC 507 and Khatema Fibres Ltd. v. New India Assurance Company Ltd., 2021 SCC OnLine SC 818, emphasizing the importance of surveyor reports in claim settlements and the limitations on insurers to reject such reports arbitrarily. The Commission noted that the surveyor's assessment should adhere to the code of conduct specified under the Insurance Act. The insurer may appoint a second surveyor if the report is not based on adequate grounds or is arbitrary. However, this decision must be substantiated with valid reasons. Despite these arguments, the Commission found no grounds to interfere with the orders of the lower forums, which had considered the evidence and arguments in detail.

Therefore, the Commission dismissed the Revision Petition, affirming the decisions of the District Forum and the State Commission.

Case Title: S.P. Singh Yadav Vs. National Insurance Company

Case Number: R.P. No. 649/2021