Consumer forum directed insurer to pay 30 lac to a trader

The UP State Consumer Disputes Redressal Commission has governed an insurer to pay Rs 30.9 lac as insurance claim to a trader whose food grain stock kept in a godown was destroyed in spontaneous combustion. The company had refused to pay the damages saying it was a case of ‘no-claim’ and its surveyor had assessed the total loss at Rs 16.9 lac.

The trader's premises was insured by the opposite party for a year from April 2006 - April 2007 for Rs 50 lac only on the stock of paddy, wheat, rice brawn D-oil cake, food grains and pulses against earthquake, risk and spontaneous combustion.

On September 11, 2006, a fire broke out on the trader’s premises due to combustion. It destroyed the stock of rice brawn D-oil cake kept in 20,200 gunny bags, weighing 14137.75 quintals. The stock was insured. The trader informed the fire officer of Sitapur for three consecutive days-September 11, 12 and 13. He also informed the insurance company and the police. The company had sent its surveyor to assess the loss. After 2-3 days, the trader saw more flames in the premises and called the firemen again but they didn’t come. 

The trader claimed a loss of over Rs 48 lac, but the insurer refused to accept it saying the trader had breached the insurance contract by misrepresenting the facts.

Consumer rights lawyer Sri Sarvesh Sharma said, “It is wrong to say that the complainant did not take out stock from the godown on the advice of the firefighters and allowed it to be destroyed.”

"The complainant is being accused repeatedly that he managed the total loss of stock in collusion with the fire brigades evidencing the total loss of stock, then how it could be said that it was partially damaged”, the commission said.

The commission also found the surveyor's assessment of total loss being Rs 16.9 lac inexact and ordered the insurance firm to pay Rs 30 lac towards compensation.

Source: http://www.insuringindia.com