Page 56 - Insurance Times April 2024

wooden barrier separated the complainant's shop from the changed the award given to an insurer by the State
neighboring shop's short circuit, which resulted in a terrible Consumer Disputes Redressal Commission, Punjab, to INR
fire catastrophe in September 2019. The fire caused the 12,60,000. The Supreme Court has upheld this modification.
Complainant to sustain substantial losses. Also changed from 9% to 7% was the interest rate.
Soon after the incident, the Complainant brought the The insured was entitled to the reinstatement value, not
situation to the attention of the Insurance Company, who the depreciated value, according to a bench made up of
assigned a surveyor to look into it. The surveyor went to the Justices M.R. Shah and C.T. Ravikumar after they reviewed
fire accident scene, took the complainant's statement, and the insurance contract. In 2014, the State Commission
asked to see any pertinent documentation. Many bills for issued a ruling, and until the actual payment, the insured
items were destroyed in the fire. From April 1, 2019, to was entitled to INR 29,17,500/, which is the reinstatement
September 9, 2019, purchases totaling Rs. 21,37,199.34 and value plus interest at the rate of 7%.
sales totaling Rs. 26,90,911.20 were recorded on the bills As of July 2, 2009, M/s. Oswal Plastic Industries is the proud
that were available.
owner of the Standard Fire and Special Perils Policy. At the
The Insurance Company was unable to produce any time the policy was in effect, on October 17, 2009, a fire
significant documentary evidence to refute the surveyor's broke out at the manufacturing premises. The material,
report, with the exception of IT reports that showed Nil stock, and machinery that were lost had a combined worth
closing stock that were later updated. Accordingly, the of INR 76,64,000. The loss was valued at INR 29,17,500 for
Commission found itself forced to accept the surveyor's reinstatement value and INR 12,60,000 for depreciation
assessment as accurate because the surveyor had carefully value, according to the insurance company's surveyor. But
reviewed all of the damage on-site. the claim was rejected by the insurance provider.
Supreme Court Directs Insurer To Pay A claim for INR 76,64,000 with interest was made in a
complaint submitted to the State Consumer Disputes
Reinstatement Value Of Goods
Redressal Commission of Punjab. The State Commission
Damaged In Fire Instead Of Depreciated granted a total of INR 29,17,500 with 9% interest from the
Value. date of repudiation, along with a settlement of INR 1 lakh
and INR 11,000 as litigation costs based on the report from
M/s Oswal Plastic Industries v. Manager, the surveyor. In an appeal, the insurance provider went to
the National Consumer Disputes Redressal Commission
Legal Deptt N.A.I.C.O Ltd.
(NCDRC). With 7% interest, the sum awarded was changed
Summary to INR 12,60,000 by the NCDRC after accepting the appeal.
Furthermore, it revoked the mandate to provide INR 1 lakh
The National Consumer Disputes Redressal Commission
as compensation.
(NCDRC) has modified an insurance company's award to INR
12,60,000, upholding the Supreme Court's decision. The The relevant language, Section 2, language 9, states that
insurance company was awarded INR 29,17,500, which is the insurance carrier may choose to replace or reinstate
the reinstatement value plus interest at a 7% rate. The damaged property rather than reimburse the amount of
insurance company's claim for INR 76,64,000 with interest loss or damage. This is something the Court observed upon
was rejected by the State Consumer Disputes Redressal reading the clause. It noted that according to the insurance
Commission of Punjab. The NCDRC, after accepting the policy, the insurance company would be responsible for
appeal, changed the award to INR 12,60,000 with 7% paying the amount necessary to reinstate or repair the
interest and revoked the mandate to provide INR 1 lakh as property if it could be lawfully restored to its previous
compensation. The court observed that the insurance condition, if the insurance company is unable to do so due
company could choose to replace or reinstate damaged to municipal or other regulations.
property rather than reimburse the amount of loss or In this instance, the property could not be restored or
damage.
reinstated by the insurance company. Due process led the
About the case Court to determine that the insured should get the
The National Consumer Disputes Redressal Commission later reinstatement value rather than the depreciated value.

50 April 2024 The Insurance Times