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Insurance Claim Stories: Chemical Manufacturing Company Vs The Oriental Insurance

CKP

Indian Independence and Insurance

Hey there,

We're about to dive into a case between M/S Dye Chem Manufacturing Co. Pvt Ltd Vs The Oriental Insurance Company.


Context:

The Case is from 26th July 2005 when there was torrential rain continuously for more than 12 hours and the rainfall recorded was 40 inches, the highest in 100 years. The problems increased due to multiple rain which flooded in Mumbai between 26/07/2005 and 01/08/2005 and that resulted in damage of compound walls, building and roads of the company premises. Complainant and its sister concern requested the Surveyor to expedite their report and also to recommend release of payment of Rs. 50 lakh on adhoc basis for immediate repair work.


Initial Process by Insurance Company:

The total claim amount was Rs.11,73,985/- which was divided in repair of internal roads, electrical Installation, compound wall and painting. Oriental Insurance Co. agreed to pay Rs.2,13,279/- as assessed by the surveyor denying claims for internal roads and applying a depreciation of 75% for the rest of the claim as the building was made in 1981 repaired once in 1989 and then in 1999.


Next Step by M/S Dye Chem Manufacturing Co. Pvt Ltd:

They rejected the offer by the insurance company and took the case to South Mumbai District Consumer Disputes Redressal Forum, Parel, Mumbai 400 012 in consumer complaint No.CC/06/448 for claiming the full amount of Rs.11,73,985/-


Intial Judgement:

The argument by the complaintant was around the fact that the survey report was prejudiced and biased and the surveyor had wrongly pointed out that the building was not well maintained and was already damaged before floods. This argument failed as the Surveyor was well reputed from IRDA and the court ruled in favour of the insurance company and asked the complainant to accept the payment being made towards the policy amounting to Rs.2,13,279/-.


Next Steps: The complaintant went against the intial order by the district court and went to the consumer forum, this time with the argument that the Insurance company has agreed on the claim amount of Rs.11,73,985/- but the depreciation amount is wrongly deducted. As the policy wordings clearly states that the policy was taken on reinstatement value basis and deducting depreciation was completely against the agreement between the Insurer and the party. Complaintant agreed that the internal roads repairing was not covered but depreciation was wrongly deducted from their claim amount. The company prayed to set aside the impugned order and prayed to allow the claim to an amount of Rs.7,79,678/- (after removing cost of repairs of internal roads) along with interest. They also prayed for compensation in the sum of Rs.5,00,000/- for mental agony and legal expenses in the sum of Rs.50,000/-


Final Judgement:

The court said that they are relying upon the surveyor's report for assessing the damage. However, depreciation of 75% is not just proper and reasonable which is deducted by the surveyor without showing the basis for it and without producing the IRDA norms which clearly stated that the policy was on reinstatment value basis. Hence, the complainant is entitled to interest on the amount awarded. As this Commission was awarding interest from the date of complaint, no separate amount is awarded towards mental agony or compensation claimed on other head. Hence, the order - ORDER Appeal was partly allowed.


Amount of Rs.7,79,678/- with 7% Interest was to be paid along with charges for court proceeding amounting to Rs 1o,000/- to be paid by the insurer in the next 60 days of the order.



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