The apex consumer commission has asked the IFFCO-TOKIO General Insurance Co Ltd to pay over Rs 24.65 lakh to a Mumbai-based consumer goods manufacturer for the loss it suffered due to water-logging in its godown after an unusually heavy rainfall.
Observing that rejection of a claim on a “hyper-technical” ground amounts to deficiency in service,the National Consumer Disputes Redressal Commission (NCDRC) dismissed IFFCO-TOKIO’s appeal against the Maharashtra State Consumer Commission’s order,which had directed it to pay Rs 24,15,441 to the firm,Prime Health Care Product.
“We do not find any merit in this appeal. We also agree with the state commission that repudiation of claim on a very flimsy and hyper-technical ground amounts to deficiency in service. The appeal is therefore,dismissed and the order of the Maharashtra State Consumer Disputes Redressal Commission is confirmed,” the bench presided by Justice V B Gupta said.
The state commission had held that the insurance firm had rejected the claim on flimsy grounds,despite insurance surveyor pegging the firm’s loss at Rs 24,15,441.
IFFCO-TOKIO had rejected the claim of the firm on the ground that the loss had occurred solely due to water seeping through the terrace slab and through unprotected openings on the second floor and such damage could not be construed as damage by flood,for which the firm was insured.
The state commission had rejected the stand taken by the insurance company as “hyper-technical”.
Agreeing with the state commission’s observation,NCDRC also increased the costs payable to the firm,from Rs 20,000 to Rs 50,000.
“Taking into account harassment undergone by complainant we deem it just and proper to raise the cost of proceedings to Rs 50,000 from Rs 20,000,” NCDRC said.
The Mumbai-based Prime Health Care Product,which makes hair care products,toothpaste,body wash,hand wash creams etc. for Hindustan Unilever Ltd,had said it had purchased an ‘industry protective policy’ from IFFCO-TOKIO.
Due to unusually heavy rains on June 30 and July 1,2008,their stocks of raw materials and packaging materials stored on the second floor of the premises were damaged,the firm said adding the loss occurred as a result of water-logging in the terrace which entered the storage area through the staircase.
The firm had claimed Rs 34.99 lakhs loss under the policy but the insurance company’s surveyor had assessed the loss at Rs 24.15 lakhs.
The insurance firm,however,had rejected the claim saying losses suffered by the firm could not be construed as damage by flood.
The state commission in its order had observed that inundation of the property due to heavy rains must be held to be within the ambit of damage due to flood or inundation,as a peril covered under the policy.
The apex consumer commission observed that the state commission was right to reject the contention of the insurance company,as acceptance of its stand would destroy the very reason for provision of insurance cover.
“No person in a proper frame of mind would seek insurance cover,paying heavy premium,for goods stored on the second floor if he knew that flood water level has to rise high enough to reach the second floor from the ground for the damage to be compensated under the policy,” it said.
“In any case,the insured cannot be held responsible for the damage caused by unprecedented rain,” the commission added.