Surveyors Should Adhere To Code Of Conduct And Report Should Not Be Arbitrary: NCDRC

Brief Facts of the Case

The complainant secured a cash credit facility from a bank and got a Standard Fire and Special Peril Policy from United Sompo General Insurance/insurer. During the policy period, a fire broke out at the premises, extinguished within two hours by the fire brigade. The insurer was informed, and a surveyor was appointed to assess the loss. However, the surveyor provided minimal loss information via email without a detailed report. The complainant claimed the loss was assessed at Rs. 33,08,584 by local revenue authorities. Despite the complainant's efforts, the insurer did not process the insurance claim. Consequently, after serving a legal notice that went unanswered, the complainant filed a consumer complaint before the State Commission of Uttar Pradesh seeking Rs. 23,17,128 for total loss, along with interest, compensation, and costs. The Commission directed the insurer to release a payment of Rs. 21,84,802 to the complainant with a yearly interest of 8% on the amount. Furthermore, the insurer was directed to pay Rs. 10,000 as litigation costs to the complainant. Aggrieved by the State Commission's order, the insurer appealed to the National Commission.

Contentions of the Insurer

The insurer argued that upon learning of the fire incident, they engaged M/s. Crawford Insurance Surveyor and Loss Assessors India (Pvt.) Ltd. to evaluate the loss. The surveyor's final report assessed the loss at Rs. 2,75,269. The insurer alleged that the complainant submitted an exaggerated insurance claim and failed to furnish essential documents to support the claim during the surveyor's assessment.

Observations by the National Commission

The National Commission highlighted that the insurer appointed a surveyor to assess damages, but discrepancies arose in the survey report compared to the claimed losses and evidence submitted. The insurer argued the claim was inflated and lacked necessary records. The commission observed that the insurer disputed the claimed loss amount despite the complainant's submissions, including medical certificates and business strategy justifications. The State Commission partially granted the claim, prompting appeals: the insurer contested the amount, while the complainant sought higher compensation and interest. The commission referred to the ruling in Sri Venkateswara Syndicate Vs. Oriental Insurance Company Limited and Another, (2009) 8 SCC 507, wherein the Supreme Court held that while insurers are mandated to use surveyor reports when settling claims, they are not bound by them. However, any rejection of these reports must be justified and not arbitrary. Furthermore, in Khatema Fibres Ltd. v. New India Assurance Company Ltd., 2021 SCC OnLine SC 818, it was established that surveyors must adhere to a code of conduct, and their reports should not be based on arbitrary considerations. It underscored that courts or consumer forums can intervene if insurers reject surveyor reports without sufficient cause or reasoning.

The Commission upheld the State Commission's order and dismissed the appeal.

Case Title: Universal Sompo General Insurance Company Limited Vs. M/S. Ujala Plastic & Case Company

Case Number: F.A. No. 1660/2019