The Gujarat State Consumer Disputes Redressal Commission has ordered an insurance firm, Oriental Insurance Company Ltd, to pay Rs14.80 lakh with 6% interest from 2001 to a complainant whose goods were damaged by internal natural heat.
The Gujarat State Consumer Disputes Redressal Commission has ordered an insurance firm, Oriental Insurance Company Ltd, to pay Rs14.80 lakh with 6% interest from 2001 to a complainant whose goods were damaged by internal natural heat. The commission has also ordered the insurer to pay the customer Rs 5000 towards costs.
Earlier, the insurer had refused to pay the customer the insurance amount on the ground that the goods were not damaged by fire as no flames were reported. But the commission had rejected the insurance company’s argument and held that just because there were no flames, it cannot be held that there was no fire.
The complainant, Prashant India Ltd, is engaged in the business of food products. Its raw materials kept in gunny bags that were arranged in a pile at its storehouse. Here the raw materials kept in the bags at the bottom were damaged due to internal natural heat.
But the insurance company had refused to put the incident in the category of damages caused by fire, on the ground that there were no flames or actual fire.
According to the petition filed by Prashant India Ltd, it had taken an insurance policy from Oriental Insurance Company for the goods stored in the factory. The policy was worth Rs4.82 crore and was for one year from April 17, 1997.
On May 7, 1997, one of the workers of the factory reported that there was a smell of smoke coming from the gunny bags in the storehouse of the factory. When they checked the place, they found that the bags at the bottom were burnt because of internal heat.
But no fire-brigade was called because there were no flames. The loss to the company because of the damaged raw materials was estimated at Rs20 lakh.
Officials of Prashant India Ltd then approached the insurer to claim insurance for the damage goods. The insurance company asked the company to appoint a surveyor who, in its report, estimated the loss incurred by the complainant to be around Rs14.80 lakh.
After valuation of the loss, the complainant approached the insurance company several times but there was no response initially. However, through a letter dated July 11, 1997, the insurance company later rejected the complainant's claim. After this, Prashant India Ltd filed a complaint with the consumer commission. In its response to the complaint, Oriental Insurance Company argued that as there was no flame in this case, there was no fire; hence the complainant could not claim insurance for damages caused by fire.
The advocate for the complainant, Varshal Pancholi, said the commission rejected the insurance company’s plea and directed the insurance company to pay the complainant the claim amount with 6% interest from 2001 (the year in which the complaint was filed).
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