Owner wins Rs 5.7 lakh payout for burglary at her diagnostic centre

The commission was hearing the complaint filed by Treatwell Poly Clinic alleging deficiency in service and unfair trade practice on the part of Bajaj Allianz General Insurance Co Ltd. 

‘Insurer had notice of discrepancy’

• The consumer commission held that the insurance company had actual notice of the discrepancy in policy coverage before the occurrence of the burglary incident. 
• It was noted that the complainant has specifically pleaded and proved that the unit was established for earning livelihood by means of self-employment. 
• The commission assessed the total net loss at Rs 5.63 lakh and held that the complainant was entitled to the amount by way of indemnification.
• The insurance company was further directed to pay Rs 7,000 as litigation cost within 30 days. 
• The commission ultimately held that no deficiency in service was attributable to the bank and that the insurer alone was responsible for the lapse. 
• It was found that the complainant had admitted to having availed banking as well as insurance services upon payment of consideration. 
• The commission, therefore, held that the complainant falls within the definition of “consumer’ under the Consumer Protection Act. 
• It was held that the evidence placed on record clearly suggests that there was the incident of burglary during the currency of the policies.
• Referring to emails exchanged between Jammu and Kashmir Bank and the insurer, it found that premiums had been deducted for fire and burglary cover relating to stocks of medicines as well as machinery and equipment in the diagnostic clinic. 
• The emails also showed that the bank had repeatedly requested the insurer to rectify the policies and issue correct cover notes in favour of the complainant.

Polyclinic burglary, claim dispute 

It was claimed by the complainant that she had established a polyclinic under the name and style of Treatwell Polyclinic and Clinical Lab for earning a livelihood by means of self-employment. She added that for the establishment and smooth functioning of the unit, the complainant availed financial assistance from the said company. 

It was contended that the insurance company issued “shopkeepers packing policy” valid from June 2016 to June 2107 and another “standard fire and perils policy” valid for the period of December 2016 to December 2017. 

She claimed that to her ill luck, during the intervening night of July 6, 2017, some unknown persons broke open the locks and committed burglary as a result of which medical equipment, machinery, auto analyser, CС machine, laptop and cash were stolen. 

After the complainant came to know about the incident the next morning, she lodged an FIR with the police station and also intimated the insurance company. 

Later, the insurance company appointed a surveyor, namely Mehraj-ud-din Shah, for survey and assessment of loss. The complainant submitted all requisite documents to the surveyor as were demanded by him. 

However, despite submission of documents and completion of all formalities, she added that the claim was repudiated on the ground that the loss claimed is not covered under the policy. 

The complainant contended that she protested and pleaded that the policies were arranged by the bank and the premium was deducted from her account. The complainant alleged that the insurance company was fully aware that the complainant was running a polyclinic and clinical laboratory and the policies were meant to cover the hypothecated stocks, machinery and medical equipment. 

Aggrieved by the conduct of the insurance company, the complainant filed a complaint seeking payment of the insurance amount besides compensation and litigation charges. She was represented by advocate Sajood Amin. 

Arguments by insurance company, bank

The counsel for the insurance company, advocate Imtiyaz A Kungroo, while admitting the insurance policies and also the incident of burglary, resisted the claim on the ground that the policies covered only stocks of medicine and did not cover medical equipment and machinery. 

It was contended that the stolen articles were outside the scope of coverage under the policy and therefore the insurance company repudiated the claim. It was contended that the repudiation of the claim is based on policy conditions and the survey report and thus cannot amount to deficiency in service. 

The Jammu and Kashmir Bank, on the other hand, maintained that it had merely facilitated the insurance by debiting the premium amounts. The bank pointed out that a health policy had erroneously been issued in the name of one “Nayeem Ahmad” instead of providing coverage for the complainant’s machinery and medical equipment.

The bank further stated that it had taken up the issue with the insurer through emails in January 2017 and that, despite repeated reminders, the insurer acknowledged the discrepancy and assured that the issue would be resolved.

Significance of ruling

This ruling of the consumer commission highlights that an insurer cannot take advantage of its own negligence to repudiate a valid claim on technical grounds after failing to rectify known discrepancies in policy coverage.

Consumer helpline number of respective state and national consumer commission: For consumer-related grievances, individuals may contact the consumer helpline in their respective states (Jammu and Kashmir Consumer Commission Helpline: 1800 180 7114) or call the National Consumer Helpline at 1915 for assistance.