Claim repudiated for lack of link between insured risk and loss
Maa Danteswari Cold Storage, a partnership firm established in 2008, had obtained a standard fire and perils policy from Reliance General Insurance for the period November 30, 2009, to November 29, 2010.
On June 19, 2010, the roof of the building housing the cold storage collapsed. The insured immediately informed the insurance company, attributing the incident to heavy rain and inundation. The insurer appointed a preliminary surveyor and subsequently a final surveyor to assess the claim. The survey report observed that there was some rainfall on the date of the incident, but no cyclonic storm. The insurer sought an explanation to establish the cause of the roof collapse. Since it received no response, the insurer sent a letter dated June 19, 2012, repudiating the claim on the ground that there was no evidence that any peril referred to in the policy had caused the loss.
The insured challenged the repudiation by filing a complaint before the National Consumer Disputes Redressal Commission (National Commission). The insured relied on the clause under which storm, cyclone, typhoon, tempest, hurricane, tornado, floods and inundation were listed as risks covered under the policy.
The insured argued that inundation and adverse weather conditions led to the collapse of the building, resulting in complete damage to the plant and machinery. The insured relied upon a report given by the sub-inspector of police, which stated that “during enquiry it came to light that the cold storage completely collapsed due to heavy rain and wind.” The insured also relied on Google’s weather reports of June 18, 19 and 20, 2010.
The insured also argued that it had taken a loan from UCO Bank and that non-settlement of the claim would result in a loss of public money as the loan amount would remain unpaid.
In its order of March 30, 2026, delivered by Justice AP Sahi and Bharat Kumar Pandya, the National Commission conclude that the collapse of the building could not be attributed to a risk insured under the policy as there was no proof of heavy rain, flood, inundation, storm, etc. Hence, it dismissed the complaint, holding that the insurer had rightly repudiated the claim.
Insurer can’t later dispute valuation agreed at issuance
GFC Hospital in West Bengal had obtained a Standard and Special Perils Policy from National Insurance Company. It had paid a premium of Rs. 51,226 for the period from July 29, 2016, to July 28, 2017, for coverage of Rs. 9,81,95,583.
On July 27, 2017, a flood occurred due to a breach in the Shilabati River embankment. Water entered the hospital’s ground floor. The councillor, Ghatal Municipality, certified this.
The flood water damaged the hospital equipment. The insured promptly intimated this to the insurer, which appointed a surveyor to inspect and assess the loss. The insured also provided all the documents sought by the surveyor. However, the claim remained pending. Hence, the insured filed a complaint before the National Consumer Disputes Redressal Commission (National Commission), claiming reimbursement for loss amounting to Rs. 46,69,687, along with interest and compensation.
The insurer contested the case on technicalities as well as merits. It contended that the requisite documents had not been supplied and that the surveyor had assessed the loss at Rs. 2,06,791, with the observation that the claim should be treated as “no claim” since there were no bills for the purchase of the equipment. The insurer also stated that when the equipment was purchased, the hospital did not have a valid licence to function. Hence, it repudiated the claim on July 25, 2018.
The Commission ordered the insurer to settle the claim by paying Rs. 46,24,687 after deducting Rs. 45,000 for salvage. In addition, it granted 6 per cent interest and compensation of Rs. 25,000.
