Insurer must Decide Claim within 30 Days After Survey - NCDRC

The insurer is bound to accept or reject a claim within 30 days from the receipt of survey report, the apex consumer commission has said while directing an insurance company to pay over Rs 10 lakh to a businessman.

The National Consumer Disputes Redressal Commission (NCDRC) asked the National Insurance Company Ltd to pay the amount to Odisha resident Madan Lal Gupta whose warehouse was looted in 1999 and was denied the insurance claim in 2002.

"Insurer is bound to accept or reject the claim within 30 days from the receipt of the survey report," it said and termed the rejection of claim three years after the incident as deficient service on the part of the insurance firm.

The commission directed the firm to pay Rs 10,47,635 to Gupta along with a cost of Rs 10,000.

"The Surveyor submitted his report to insurance company on July 12, 2000. The company, after a stoic silence of over two years, vide its letter dated December 12, 2002, repudiated the claim... "Under the circumstances, we have no option but to hold that the repudiation of the claim in question by the insurance company, being in clear breach of the mandatory statutory provisions, amounts to deficiency in service on its part," the NCDRC bench headed by its President Justice D K Jain said.

"If the claim is to be rejected, reasons have to be recorded in writing and communicated to the insured (person) within the said period, otherwise offer for settlement in terms of the report has to be made within the said time," the Commission added.

According to the complaint filed by Gupta, his warehouse was looted by a group of miscreants on November 2, 1999 during a cyclone which had hit the coastal belt of Odisha that year.

The incident was reported to the police on November 4, 1999 and the next day itself the suveyor appointed by the insurance company inspected the loss.

The survey report was submitted to the company on July 12, 2000 assessing the loss at Rs 10,47,635, the complaint said.

It further alleged that even after repeated representions during the months of January, April, May, June and December 2001 the insurance company failed to respond.

The firm, however, rejected the claim in December 2002 saying the loss was not due to theft but due to looting.

The state commission had also rejected Gupta's claim, saying the incident was a case of looting and not of burglary and hence comes under the exclusion clause of the policy.

The apex consumer commission, however allowed the appeal and asked the insurance company to pay the amount.