JAGDISH SINGH vs National Insurance Co. Ltd

THE complainant had got his cold-storage under construction insured with the opposite party Insurance Company for Rs. 20 lacs with effect from 4.5.1990 to 3rd of May, 1991. While the cold-storage was under construction and only roof remained to be built, as a result of a cyclonic typhoon on the 28th July, 1990 the building under construction collapsed completely. He estimated the damage to the tune of Rs. 10 lacs and lodged a claim on 4.7.1990.

THE opposite party Insurance Company got the damaged property surveyed. THE first spot survey was done in August, 1990 and the final loss survey was done in September, 1991 who recommended net assessed loss of Rs. 6,93,706/- considering that against the estimated cost of construction of Rs. 20 lacs construction work worth Rs. 13 lacs had been done. On 12th July, 1992 the opposite party-Insurance Company repudiated it liability. THE complainant has also claimed Rs. 5 lacs as compensation for escalation in the cost of construction materials and for business loss due to the inordinate and unjustified delay in the settlement of his insurance claim. The opposite party-Insurance Company in its reply to the complaint as also during the hearing stated that a fire policy ''A'' had been issued on 4.5.1990. This was issued inadvertently. This fire policy ''A'' can be issued only for insuring dwellings, officers, hotels, shops and small scale industries. Buildings under construction are covered by fire policy ''C. Though fire policy ''A'' was issued inadvertently, the premium charged was that in respect of fire policy ''C. However, the premium charge in fire policy ''C for extra perils including typhoon, hurricane, tornado etc., was not charged. The mistake was discovered, however, in 1992 and an endorsement policy was issued to the complainant correcting the above mistake, i.e. substituting fire policy ''C'' for fire policy ''A''. The opposite party-Insurance Company, however, refused to entertain the claim on the ground that perils on account of typhoon, hurricane, cyclone have not been covered presuming that the fire policy ''C'' was effective from the very beginning It also assailed the claim for damages for Rs. 15 lacs on the ground that the claim of Rs. 15 lacs was highly exaggerated and inflated.

At the hearing Counsel for the opposite party Insurance Company could not explain as to how the Insurance Company can repudiate the claim of the insured on the policy of insurance on the ground that it had issued a wrong policy and failed to charge the appropriate premium since the policy clearly was for special perils. In these circumstances, it would have only been fair for the opposite party Insurance Company to have settled his claim on the basis of fire policy ''C'' including the special perils and recovered the premium short charged for the special perils from the amount payable.

THE facts clearly disclose deficiency of service on the part of the opposite party Insurance Company in settling the claim of the complainant insured on the insurance policy and of unjustified and inordinate delay of three years which necessarily meant higher construction costs & must have caused business loss to the complainant. We, therefore, order as under: (i) THE complainant is allowed a sum of Rs. 6,93,706/- being the net loss assessed by the Surveyor appointed by the Insurance Company in September, 1991. THE complainant petitioner had no opportunity to see the survey report inasmuch as this does not appear to have been made available to him, the claim having been altogether repudiated by the opposite party Insurance Company. As such it shall be open to him to submit a claim for the balance of the amount against his total claim of damages of Rs. 10 lacs to the opposite party Insurance Company and if necessary to file a suit for recovery thereof but not exceeding Rs. 10 lacs in any case.

(ii) THE complainant is entitled to interest at 18% on the amount allowed viz. Rs. 6,93,706/- till the date of payment.

(iii) THE complainant has claimed Rs. 5 lacs on account of increase in the prices of building materials and also for loss of business for two years as a result of inaction on the part of the opposite party Insurance Company in settling the claim. He has not given details as to how he has assessed this loss. It has to be noted that when the accident took place the building was under construction and the question of business loss would have arisen only after the building had been completed and commissioned. While it is a matter of common knowledge that the prices of materials have gone up, the complainant has not quantified the increase on account of price escalation. In the circumstances, he is allowed a sum of Rs. 25,000/- as compensation for the inordinate and unjustified delay in the settlement of his claim.

(iv) THE Insurance Company shall pay Rs. 5,000/- as costs to the complainant.

Complaint allowed.