NCDRC: Surveyor Report In An Insurance Claim Is Inconclusive And Not Binding On The Insured Or The Insurer

Brief Facts:

The Complainant Company, which makes plastic cups and containers, bought an insurance policy from the Opposite Party Insurance Company to protect itself against fire damage. Unfortunately, a fire broke out in the factory and destroyed a lot of equipment and materials. The Complainant filed a claim for the damage, but the Opposite Party denied the claim. The Complainant requested the surveyor reports that led to the rejection of his claim and found that they contained many inconsistencies and biases in favour of the insurance company. The Complainant then sent a detailed reply to the Opposite Party, countering all the allegations made in the reports.

The police examined debris samples from the fire and sent them to a lab. The lab found no evidence of fuel like petrol or diesel in the samples. The complainant sent this report to the insurance company and replied in detail, countering all allegations made against them in previous reports. They asked the insurance company to review their decision of denying the claim, but the company did not respond.

The Complainant Company filed a complaint against the Opposite Party Insurance Company for not providing satisfactory service and engaging in unfair trade practices. The Complainant in this instant case asked compensation for the loss and damage caused by a fire that occurred on April 16, 2011. He contended that the Surveyors took 14 months to submit their report, even though the IRDA (Protection of Policyholder's Interests) Regulations 2002 says they should only take 6 months. He also stated that the fire that destroyed the Complainant's property was accidental and beyond human control.

The Opposite Party Insurance Company said that the fire at the Complainant Company was not an accident. They claimed that the fire was caused by accelerants like kerosene, which means someone started it on purpose. They also said that the Complainant's workers did not try to put out the fire with fire extinguishers and that the fire brigade was called too late. The Insurance Company also said that the samples taken by the Complainant were not collected properly and that the lab that examined them did not have the right equipment. They further contended that the Complainant's claim was denied because they violated the policy by deliberately starting the fire.

Observations of the Commission:

The NCDRC started by citing the decision in the case of Canara Bank v. United India Insurance Co. Ltd (2020) 3 SCC 455, where the Hon'ble Supreme Court stated that if the Insured did not cause the fire, the insurance company cannot escape liability in terms of the insurance policy. The commission further held that there was no evidence that the Insured caused the fire, and the insurance company must settle the claim. The Commission relied on the Supreme Court judgment in New India Assurance Co. Ltd. vs Pradeep Kumar (2009) 7 SCC 787 and added that the Surveyor's Report might be the prerequisite for the payment or settlement of the claim but it was not binding on the Insured or Insurer as it is not deemed conclusive in nature. The Insurance (Amendment) Act, 1968, requires an approved surveyor to assess claims of ₹20,000 or more before the insurer can settle the claim. According to the Commission, however, the insurer can settle the claim for a different amount than the amount assessed by the surveyor.

The insurance company repudiated the claim based on the surveyor's report, without considering the Forensic Science Laboratory's examination report. Therefore, the Commission found the insurance company deficient in service and partly allowed the complaint, directing the insurance company to pay ₹3,50,98,046/- along with interest and ₹50,000/- towards the cost of litigation within 8 weeks to the Complainant.

Case: M/S Flowtex Products vs M/S United India Insurance Co. Ltd.

Case No.: CONSUMER CASE NO. 359 OF 2013

Counsel for the Petitioner(s): Mr S.M. Tripathi

Counsel for the Respondent(s): Ms Nanita Sharma and Mr Fareek Faroo

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