October-19: Settled in Court
- Posted by CERC India
- Posted in October-2019
Insurance company cannot reject claim based on suspicion
Oswal Plastic Industries had taken a fire policy from New India Assurance for its industrial establishment on 27 June 2009. The sum insured was increased to Rs 2.5 crore from 2 July 2009. A fire damaged four machines and some raw materials in Ocotober 2009. The surveyor assessed the loss at Rs 29,17,500 on reinstatement basis, and Rs 12,60,000 as the depreciated value.
The claim was rejected on the ground that the insured machines had been relocated. The insurer also suspected that the fire was not accidental and also disputed the endorsement enhancing the sum insured. Oswal Plastics filed a complaint before the Punjab State Commission. The Commission ordered the claim to be settled for Rs.29,17,500 Â with 9 % interest, 1 lakh as compensation for mental harassment, and Rs. 11,000 as litigation expenses.
The insurer filed an appeal. The National Commission observed that neither the surveyor nor the investigator had concluded that the fire was caused intentionally. So the claim could not to be rejected on the basis of the insurerâ€™s suspicions.
It also observed that the insurance company did not check where the machines were being located at the time of enhancement of coverage, so the insurer was not entitled to raise objection after the claim was lodged.
Since the machines were not reinstated, the National Commission directed the insurance company to pay the depreciated value of Rs. 12,60,000 Â instead of Rs. 29,17,500 with 7 % interest. Rs. 11,000 towards litigation costs were allowed but compensation ofÂ Rs. 1 lakh was denied as a company cannot claim for mental harassment.
Point of Law
An insurer who fails to physically check the insured property cannot later raise objections when a claim is lodged
[Source: The order of the National Consumer Disputes Redressal Commission, New Delhi, dated 20 February 2019 on First Appeal No. 207 of 2015]
Bhavesh Joshi, a doctor from Rajkot had booked a holiday for his family through MakeMyTripÂ to stay in Suman Nature Resort in Almora district from 30 May to 1 June 2017. On reaching, he found that the booking was for one day only. The resort forced them to vacate the next day. They faced lot of trouble in the forest area on being thrown out of the resort. MakeMyTrip did not respond to his complaints and he had to manage on his own for next two days.
The doctor approached the Rajkot Consumer Forum seeking compensation for the harassment suffered. He argued that he is a doctor and finds little time for vacation with family which was ruined due to mismanagement by the company. The company had offered Rs 10,000 to Joshi for settlement, but it was not acceptable to him.
The court observed that the offer of Rs 10,000 for settlement gave reason enough to believe that there was deficiency in service. MakeMyTrip was directed to pay compensation of Rs. 50,000 with 7 % interest for hardship suffered and Rs 5,000 towards legal expenditure.
Point of Law
A travel management company is liable to pay compensation for hardship suffered, if it fails to provide all travel arrangements and bookings as per commitment
[Source: The order of the District Consumer Disputes Redressal Forum (Additional), Rajkot dated 11 FebruaryÂ 2019 on Consumer Complaint No.310/2018]