Insurance Claim Repudiation Without Cogent Evidence Amounts To Deficiency In Service: Delhi State Consumer Commission

The Delhi State Consumer Disputes Redressal Commission has held that repudiation of an insurance claim based on mere assumptions and presumptions, without cogent evidence, amounts to deficiency in service. The Commission comprising Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member) dismissed the appeal filed by Oriental Insurance Company Ltd. and upheld the order directing settlement of the claim in favour of the insured. Brief Facts The complainant, Praveen Kumar Sharma, had obtained a Householder Insurance Policy from Oriental Insurance Company Ltd. for the period 24 December 2009 to 23 December 2010, covering household articles including gold jewellery valued at ₹18,37,304/-, based on a valuation report submitted by an approved valuer. On 7 January 2010, while travelling on his scooter, the complainant lost a pouch containing his wife's jewellery. He immediately lodged a Non-Cognizable Report (NCR) with the police and intimated the insurance company on the following day. A surveyor appointed by the insurer assessed the loss at ₹17,75,520/-, but expressed doubts regarding the circumstances surrounding the loss. Relying on these observations, the insurer repudiated the claim on 15 April 2010, alleging lack of reasonable care, absence of purchase bills, and improbability of the incident. Aggrieved, the complainant approached the District Consumer Disputes Redressal Commission, which allowed the complaint and held the insurance company guilty of deficiency in service. The District Commission directed the insurer to pay ₹17,75,520/- towards the loss of the insured jewellery, along with interest at 9% per annum from the date of repudiation till realisation, and ₹50,000/- as compensation and litigation expenses. Challenging this order, the insurance company filed an appeal before the Delhi State Consumer Disputes Redressal Commission. Contentions of the Insurance Company The insurance company contended that the claim had been rightly repudiated as the complainant failed to exercise reasonable care while carrying valuable jewellery in his pocket during travel. It was argued that the circumstances surrounding the loss were suspicious and improbable, and that the complainant had failed to produce purchase bills of the jewellery to establish its ownership and value. The insurer placed reliance on the surveyor's report, which, while assessing the quantum of loss, expressed doubts regarding the manner in which the jewellery was allegedly lost. On this basis, the insurance company submitted that the loss did not fall within the terms and conditions of the policy and that no deficiency in service could be attributed to it. Observation & Decision The State Commission observed that the insurance policy covering the jewellery had been issued after the insurer accepted the valuation report submitted by an approved valuer and collected the requisite premium. Having issued the policy on this basis, the insurer could not subsequently dispute the existence, ownership, or valuation of the insured jewellery after the occurrence of loss. The Commission noted that the complainant had promptly reported the loss of jewellery to the police and duly intimated the insurance company without delay, thereby complying with the material terms and conditions of the policy. It was held that repudiation of the claim based merely on doubts, assumptions, or subjective perceptions, without any cogent supporting evidence, could not be sustained in law. The Commission concluded that the repudiation of the insurance claim was arbitrary and amounted to deficiency in service under the Consumer Protection Act. Accordingly, the appeal filed by the insurance company was dismissed, and the order directing settlement of the claim along with interest and compensation in favour of the complainant was upheld. Case Details Case Title: Oriental Insurance Company Ltd. v. Praveen Kumar Sharma Case No.: FA/1072/2014 Click Here To Read/Download Order

Insurance Claim Repudiation Without Cogent Evidence Amounts To Deficiency In Service: Delhi State Consumer Commission

Praveen Mishra

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