Non-Settling Of Insurance Claim Within Timeframe Is Unfair Trade Practice: Baramulla District Commission

Brief Facts:

The complainant purchased an insurance policy from Tata AIG General Insurance Company Ltd (Opposite Parties) for his residential house for the sum insured of Rs.31,20000/- under Policy No. 7700027902 which was effective from 03.04.2022 to 02.04.2024. The complainant's case is that on 05.01.2024, during the subsistence of the insurance policy, the insured residential house was gutted in fire accident. The cow shed was also damaged due to the fire incident. The fire and emergency personal arrived along with the Deputy SP & SHO. Though they tried to control the fire with the help of locals, all the belongings of the house and cow shed were dashed into ashes. The complainant informed the insurance company at the appropriate time and registered his claim with required documents.

On 24.06.2024 the insurance company sent a letter to the complainant stating that the complainant's daughter has taken a self-help loan for running a boutique in one room of the first floor of the building, the said unit was insured with another company. As per the insurance company the fire originated from that room. Another room was rented out to the social welfare department for running an Anganwadi center, which is against the insurance policy terms.

As there was no positive response from the Opposite party, the compliant approached the consumer commission through the complainant. Despite service, the Opposite parties did not appear before the Commission, they were proceeded ex-parte.

Observation by the District Commission:

The District Commission referred to the evidence and written arguments submitted on behalf of the Complainant. The Commission observed that Anganwadi centre is not a commercial institution as the same is a Govt supported facility under ICDS without profit motives. The primary function of Anganwadi centres is social welfare. Therefore, establishment of Anganwadi center, if otherwise was established in the insured building of the complainant, cannot change the residential nature of the insured building. The Commission held that the insurer is duty bound to comply with the provisions of Consumer Protection Act and ensure fair and transparent claim settlement practices. It added that non-settling the claim of the complainant within the timeframe is unfair trade practice on the part of the opposite parties

The Commission directed the opposite parties to pay the insured amount of Rs. 31,20,000/-, Rs.5,00,000/- as compensation, Rs.30,000 as litigation charges to the complainant and Rs. 20,000 towards the Consumer Welfare Fund, Baramulla/Bandipora.