Baramulla District Commission Holds New India Assurance Co. Liable For Arbitrary Under-Assessment Of Insurance Claim

Brief facts:

The complainant has a business of readymade garments at the main market, Baramulla. The business unit was insured with New India Assurance Co. Ltd. ('insurer') and the policy was valid from 08.05.2023 to 07.05.2024. The premium paid was Rs. 3,661/- against the sum assured of Rs. 15,02,000/-. The business unit of the complainant was struck due to devastating fire incident which occurred on 19.08.2023 and engulfed almost 80% of the business along with furniture and rest 20% was destroyed by water. An FIR was also registered since the complainant's good got completely destroyed. The damaged goods were worth Rs. 30 lakhs.

As per the complainant, all requisite documents including copy of FIR, Fire and Emergency certificate were submitted to the insurer however, the insurer agreed to pay an amount of merely Rs. 5,31,503/- without any reasonable cause. The complainant received the amount in protest. Hence, a complaint was filed by the complainant before the Baramulla district commission.

The complainant contended that the insurer company is liable for breach of contract for not complying with the terms and conditions of the insurance policy and is guilty of deficiency of service and unfair trade practice. It was further submitted that the negligence and unfairness has caused monetary loss and mental agony to the complainant.

None appeared on behalf of the insurer. Hence, he was proceeded as ex-parte by the commission.

Observations of the commission:

The commission examined all the witnesses, evidence produced by the complainant and the documents on record. The bench observed that the complainant has placed reliance on stock/ purchase bills which substantiates that the loss of insured shop is substantially higher than the amount paid by the insurer. It was observed that the insurer was under an obligation to assess the loss of the insured shop and redress the grievances of the complainant.

It was further observed that under assessment / under payment amounts to unfair trade practice as well as deficiency in service on the part of the insurer. Hence, the insurer was held liable for restricting the amount to Rs. 5,31,503/- arbitrarily.

Thus, the complaint was allowed with following reliefs:

1. 1.Re-assessment of the loss based on stock bills and payment to balance amount
2. 2.Rs. 3,00,000 as compensation for mental agony
3. 3.Rs. 20,000 as litigation costs

Case Title: Rubeena Manzoor vs New India Assurance Co. Ltd.

Case Number: Consumer Complaint 22/2024

Date of Decision: 27.08.2025