Undervaluation Of Claim Amount, Surveyor Report Not Binding: Chandigarh District Commission Holds New India Assurance Co. Liable

Brief Facts:

The Complainants were engaged in the sale and purchase of electronic goods since August 2018, maintaining regular accounts and filing returns. They obtained insurance for their electronic goods from New India Assurance Company Limited (“Insurance Company”). On 19th September 2020, a fire occurred in the Complainants' godown/office premises which was later extinguished by the Fire Brigade and reported to the police. The insurance company appointed a surveyor who was provided with all necessary documents. As per the documents, the stock value of the electronic goods was Rs. 42,40,949.56/- as of the incident date. However, the surveyor's assessment resulted in a claim approval of only Rs. 10,92,274/-. The Complainants made several communications with the insurance company to dispute the surveyor's report but didn't receive any satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Disputes Redressal Commission-II, U.T. Chandigarh (“District Commission”) and filed a consumer complaint against the insurance company.

The insurance company acknowledged the events as described by the Complainants but contended that the Complainants failed to provide specific details of the item-wise loss. It argued that the claim bill of Rs. 41,81,024/- was based on the closing stock in the Trading Account which was significantly different from the physical inventory conducted jointly. It disputed the Complainant's valuation of the actual loss at Rs. 42,40,949.56/-, stating that it should be Rs. 13,21,980/-, with additional deductions made for dead stock, salvage, and policy excess.

Observations by the District Commission:

The District Commission noted that the appointed surveyor was provided with all necessary documentation, including a trading account indicating a stock value of Rs. 42,40,949.56/- on the date of the incident. This documentation was duly attested by a Chartered Accountant, along with balance sheets and ledger records. Despite this, the surveyor assessed the loss at only Rs. 10,92,274/-, significantly lower than the actual stock loss claimed by the Complainants.

The District Commission held that the surveyor dismissed a substantial portion of the claim without providing adequate and justifiable reasoning. Notably, the surveyor's report acknowledged the extensive damage caused by the fire, stating that the entire stock was destroyed.

The District Commission referred to the decision of the Supreme Court in New India Assurance Company Ltd vs Pradeep Kumar [Civil Appeal No 3253 of 2002] and held that while the surveyor's assessment is a crucial factor in claim settlement, it is not absolute or binding. Therefore, the District Commission held the insurance company liable for deficiency in the service for not honouring the complete claim of the damaged stock.

Consequently, the District Commission directed the insurance company to reimburse the Complainant with an amount of Rs. 42,40,949.56/-, representing the cost of the damaged stock, minus any previously paid amounts. Additionally, the insurance company was instructed to pay interest at a rate of 9% per annum from the date of loss, i.e., 19.9.2020, until the actual payment to the Complainant. Moreover, it was also directed to pay a compensation of Rs. 20,000/- to the Complainant to cover litigation expenses and other related costs.