Wrongful Rejection Of Claim: Uttarakhand State Commission Holds New India Assurance Liable For Deficiency In Service
The Uttarakhand State Commission, presided by Ms. Kumkum Rani and Mr. C.M. Singh, affirmed the District Commission's decision and held New India Assurance liable for deficiency in service. Brief Facts of the Case The complainant took a loan from a bank to build a house. The house was insured with New India Assurance/insurer for ₹50,000 under a fire and special perils...
The Uttarakhand State Commission, presided by Ms. Kumkum Rani and Mr. C.M. Singh, affirmed the District Commission's decision and held New India Assurance liable for deficiency in service.
Brief Facts of the Case
The complainant took a loan from a bank to build a house. The house was insured with New India Assurance/insurer for ₹50,000 under a fire and special perils policy. Heavy rainfall caused a landslide that completely destroyed the house. He informed the local authorities and the bank, who then notified the insurer. The insurer neither paid the amount nor arranged a site survey. Later, the insurer rejected the claim. This caused mental and financial stress to the complainant. The complainant filed a complaint before the District Commission for deficiency in service. The District Commission allowed the complaint and directed the insurer to pay ₹50,000 as the insured amount, ₹2,000 for mental and financial loss, and ₹1,000 as litigation costs. Aggrieved, the insurer filed an appeal before the State Commission of Uttarakhand.
Contentions of New India Assurance
The insurer denied all allegations. It said the claim was reported too late. It claimed that the damage was due to continuous rainfall, which was not covered under the policy. The insurer argued that only earthquake-related damage was covered under the policy. Furthermore, it was argued that since the complainant delayed informing them and the loss was outside the policy terms, it claimed there was no deficiency in service.
Observations by the State Commission
The State Commission conducted a detailed review of the insurance policy issued by the insurer to the complainant. It noted that the building was insured under a Standard Fire and Special Perils Policy, with an add-on cover for Earthquake (Fire and Shock). The insurer had charged premiums for both these components. Contrary to the insurer's claim that the damage was due to “incessant rainfall” and not covered, the Commission referred directly to the policy documents, especially to the section titled Policy Coverage and Perils Covered. The Commission highlighted that the policy clearly lists subsidence/landslide including rockslide as a covered peril under the Standard Fire and Special Perils Policy. The earthquake-related risks were listed separately under add-on covers. Thus, the insurer's argument that only earthquake-related damage was covered was incorrect and misleading.
Upon examining the facts, the Commission found that the complainant's house was completely destroyed due to a landslide caused by continuous heavy rainfall, and this was a classic case of subsidence/landslide, directly covered under the main policy. Since the incident fell within the scope of insured perils, the insurer's repudiation of the claim amounted to wrongful denial.
The Commission rejected the insurer's contention about delay in claim intimation, stating that the insured had informed the bank and local authorities promptly, and the bank in turn notified the insurer.
Hence, the Commission concluded that there was no legal or factual basis for the insurer's rejection of the claim. It observed that the insurer had not fulfilled its contractual obligation and had shown clear deficiency in service.
As a result, the appeal was dismissed, and the District Commission's order directing payment of ₹50,000 (insured sum), ₹2,000 for mental and financial loss, ₹1,000 litigation costs was upheld.
Case Title: New India Assurance Company Limited Vs. Sh. Rajender Singh
Case Number: SC/5/A/13/310