IMPORTANT POINT
Repudiation of insurance claim on a very flimsy and hyper-technical ground amounts to deficiency in service.

Vinay Kumar, Member—The IFFCO TOKIO General Insurance Co. has filed this appeal against the order of Maharashtra State Consumer Disputes Redressal Commission in Consumer Complaint No.CC/10/3. In the impugned order, the claim of the Complainant (respondent in the present proceedings) was allowed for a sum of Rs.24,15,441/-, which was the amount of net loss, as assessed by the Surveyor appointed by the appellant/Insurance Company.

2. The matter pertained to an insurance claim under an ‘Industry Protective Policy’ taken by the Complainant, who was a manufacturer of hair care products, toothpaste, body wash, hand wash creams etc. for M/s. Hindustan Unilever Ltd. The case of the Complainant as seen from the Consumer Complaint before the State Commission was:-

“In the night intervening 30th June 2008 and 1st July, 2008 there were heavy rains in Daman. In the premises of the Complainant, rain water affected/damaged their stocks of raw materials, packaging materials stored on the second floor i.e at their outside godown as well as factory premises. Prior to the rains all the stock items were in good condition. But due to heavy rains that lasted the entire night (30.6.2008) and the following day (1.7.2008), there was accumulation of water in their store. It was noticed that water had accumulated on the terrace due to unprecedented heavy rain and the same entered into storage area through the staircase. The Complainants’ persons at the premises, immediately started shifting the stocks and tried to save them from damage. However, much of the material was damaged due to unexpected and heavy rains. As per quality parameters the complainants would not be allowed to use such material which had been affected by the water.

Due to the rain water which got accumulated in the Complainants’ premises, packaging materials which were mainly in the form of bottles, cartons, sachets, tubes, sleeves, laminated pouches, labels etc of different sizes and varieties and packaging of some of the materials packed in corrugated boxes were also affected.”

3. Accordingly, on 1.10.2008 the Complainant made a claim for Rs.34.99 lakhs under the policy. While the Surveyor assessed the loss at Rs.24.15 lakhs, the appellant/Insurance Company repudiated the claim by their letter of 26.12.2008 on the ground that the damage had occurred solely due to water seeping through the terrace slab and through unprotected openings on the second floor. According to the OP/insurance coy, such damage would not be construed as damage by flood. This stand was challenged by the Complainant on the basis of condition no.6 in the policy, which permits loss due to flood or inundation, except when it has been caused by an earthquake volcanic eruption or convulsions of nature. According to the Complainant, the loss in his case had directly resulted from inundation on account of rush of rain water into the godown from the terrace through the stair case. Allegedly, the proximate cause of damage to the goods was inundation on the terrace due to heavy rain resulting in seepage, without which the loss could not have occurred.

4. The State Commission has taken into account the fact that there was heavy rain on these two dates, which is admitted by the Insurance Company. The extent of damaged has been assessed by the Surveyor appointed by the Insurance Company at Rs.24.15 lakhs. In this background, considering the objection of the OP/Insurance Company— that the store was located on the second floor of the building and therefore there is no question of any flood/ inundation causing any damage— the State Commission has observed that:-

“In our view, when the Surveyor assessed the loss of the complainants to the extent of `24,15,441/-, repudiation of the claim of the complainants was simply on the flimsy grounds. The insurance cover was available to the complainants/Company for its premises in question at Daman in respect of peril arising from the flood or inundation. Inundation is an accumul