The Commission said the claim of fraud on part of the complainant should be corroborated by cogent evidence, without which it is only speculative.
The National Consumer Disputes Redressal Commission (NCDRC) recently held that any allegation of fraud on the insurance claimant's part should be established by solid evidence in order to reject an insurance claim.
Reliance on any condition in the insurance policy pertaining to a fraudulent claim should be corroborated by cogent evidence without which it is only speculative, the NCDRC said.
It made the observations while directing Oriental Insurance Company to pay a premium reseller of motor parts an amount of ₹6.97 crores for the loss suffered by it on account of fire at its warehouse in 2013.
The Commission’s Member Subhash Chandra said the repudiation of the claim in question by Oriental Insurance was in breach of the mandatory statutory provisions “amounting to deficiency in service on its part”.
It found the surveyor’s conclusion that the claim by the complainant was fraudulent, was not supported by any evidence.
“Reliance of the Opposite Party No.1 [Oriental Insurance] on the Surveyor’s report to conclude that the claim was exaggerated, therefore, does not find evidentiary support within the report of the Surveyor,” the Commission said.
Swarna Motors, the claimant, had taken a Standard Fire and Perils Policy with a cover for around ₹7.37 crores. After the fire at its office in 2013 led to destruction of its inventory and stocks amounting to ₹6.97 crores, it lodged a claim.
The Surveyor appointed on October 14, 2013 submitted its report only on April 1, 2015, and it was provided to the complainant only on December 29, 2015.
While the surveyor had assessed the loss at ₹48.83 lakh, the insurance company on January 3, 2016 repudiated the entire claim on the ground that the same was exaggerated and fraudulent.
The Commission noted that Regulation 9 of the IRDA (Protection of Policyholder’s Interests) Regulations, 2002 directs a Surveyor to submit his report within 30 days and, in any case, within 45 days from the date of appointment.
It added that the insurer was bound to accept or reject the claim within 30 days from the receipt of the Surveyor’s report as per Regulations of the Insurance Regulatory and Development Authority.
However, the Commission said there was an unexplained delay of nearly eight months in taking a decision on the claim.
It also said the claim of fraud on the part of the claimant should have been corroborated by cogent evidence.
“In view of the above, there is no option but to conclude that the repudiation of the claim in question by the Opposite Party No.1 was in breach of the mandatory statutory provisions amounting to deficiency in service on its part.”
Accordingly, the Commission allowed the complainant and asked the insurance company to pay the claimed amount along with an interest of six percent. It also ordered payment of litigation costs of ₹50,000.
Advocates Arush Khanna and Prapti Allagh appeared for the complainant Swarna Motors.
Advocates PK Seth and Yashika Sharma appeared for Oriental Insurance Company Ltd.