Kupwara Consumer Commission Holds Bajaj Allianz Liable For Underpayment Of Fire Insurance Claim; Orders Compensation To Fire-Affected Shop Owner

Brief Facts of the Case:

Madina Electricals, through Mr. Mohammad Shafi Malik, filed a complaint against Bajaj Allianz General Insurance, alleging deficiency in service. The shop, insured for a premium of ₹4,961/-, was destroyed by fire on June 20, 2014, with the Fire. The Fire and Emergency Department and the police visited the site and issued a certificate confirming the fire.

After the incident, a surveyor appointed by the insurer assessed the loss at only ₹4,50,000/-, despite the complainant providing all documents and showing the stock was worth ₹21,51,689/-. The insurer did not resolve the issue despite repeated requests, forcing the complainant to file a case before the Kupwara Consumer Commission

Contentions of the Complainant:

The complainant argued that, despite providing all relevant documents, the surveyor valued the loss at only ₹4,50,000/-, while the actual stock was worth ₹21,51,689/-. He claimed the insurer underpaid the claim, did not respond satisfactorily to repeated requests for full settlement, and as a result, he suffered financial loss and mental distress. He sought full payment of damages, compensation, and interest from the Commission

Contentions of the Insurance Company:

The company argued that the payment was made based on the surveyor's report and company records, and there was no justification for the higher value claimed by the complainant. The insurance company maintained that the allegations of underpayment or deficiency in service were unfounded, and therefore, the complainant's claim should be dismissed.

Observation and Decision of the Commission:

The Commission observed that the actual stock of the complainant's shop was approximately ₹21,51,689/-, while the surveyor assessed the loss at only ₹4,50,000/-, clearly indicating underpayment by the insurance company. The surveyor himself admitted that the complainant had submitted all the original bills and necessary documents, yet the loss was significantly undervalued.

The Commission further noted that the insurance company failed to make proper payment despite having all requisite information, which resulted in financial loss and mental agony to the complainant. The Commission held that underpayment and under-assessment by the insurer amounted to unfair trade practice and deficiency in service

The Consumer Commission issued the following directions:

1. The insurance company is directed to pay ₹4,76,190/- to the complainant, calculated as per the average clause, along with interest at the rate of 6% from the date of claim till the date of realization.
2. The insurance company is further directed to pay ₹50,000/- to the complainant as compensation for the mental agony and inconvenience caused due to the delay and underpayment.

Case Title: Madina Electricals vs. Bajaj Allianz General Insurance Company Ltd.

Case No.: CC 08/2017

Click Here To Read/Download The Order