LI Network
Published on: 24 July 2023 at 12:45 IST
Markandeshwar Food & Allied Products, a limited company, had obtained four Standard Fire and Special Perils insurance policies from New India Assurance. Among these policies was one worth Rs. 2 crores, which provided coverage for the building, stocks of milk, milk products, ghee, butter, dairy products, packaging, and other materials related to the company’s business.
Tragedy struck on February 7, 2012, when a fire broke out at the insured premises. The necessary authorities, including the fire brigade and the police, were immediately informed, and the insurer was notified.
A surveyor appointed by the insurance company assessed the damage and submitted a report, concluding that the total loss of stock amounted to Rs. 56,42,954, and the loss of packing material was Rs. 40,17,572.08, taking into account salvage and other deductions.
However, a dispute arose when the insurer only paid Rs. 2,35,356 for the damage to the packaging material. Dissatisfied with the settlement, the insured filed a complaint before the Haryana State Commission. The insurer defended its position, asserting that the claim had been appropriately settled by applying the average clause based on the coverage limit under each risk category.
The State Commission partially upheld the complaint and directed the insurer to pay Rs. 40,17,572.08 for the loss of packaging material as assessed by the surveyor but did not award any additional compensation. Both the insured and the insurer were dissatisfied with this decision and appealed against it.
The National Commission carefully reviewed the case and found that, despite the breakdown of coverage under the other three policies, the Rs. 2 crores policy did not have any such division of risks under various heads. Instead, it offered comprehensive coverage, including the building, stocks, and packaging materials.
Therefore, the Commission concluded that the insurer had erred in applying coverage limits and upheld the State Commission’s ruling. The insurer’s appeal was dismissed.
The National Commission further decreed that the insured would be entitled to compensation in the form of 9% interest from the date of the complaint. A three-month period was granted for compliance, and if the payment was delayed, an additional 12% interest would be levied.
This case serves as a reminder of the importance of accurately assessing coverage under insurance policies and ensuring fair compensation for damages in such unfortunate events. The insured party rightfully received the compensation they deserved, and the court’s decision supports consumer rights in insurance matters.
