Compensate if insured hasn't been negligent

A sugar factory, Dr Babasaheb Ambedkar Sahkari Sakhar Karkhana, was covered under the Government Insurance Fund for risk to plant and machinery as well as stocks kept in its factory premises. The insurance policy was valid from November 29, 2007 to November 29, 2008.

On April 25, 2008, a truck was taken inside one of the godowns to load the sugar. Suddenly, a spark emanated from the truck's exhaust silencer, which ignited one of the sugar bags, and the fire began to spread quickly. The fire brigade was summoned, which sprayed water to extinguish the fire. The resultant loss was estimated by the insured at Rs 45,95,794.

Upon lodging of a claim, the insurer appointed a surveyor who assessed the loss at Rs 7,60,000 but recommended repudiation on the ground that loss had occurred due to the negligence of the insured in allowing a truck to be driven inside the godown.

The insured then filed a consumer complaint, but the Maharashtra State Commission upheld the insurer's contention and dismissed the complaint. The insured appealed against the order.

The National Commission observed that the quantity of 10,815 quintals of sugar stored in the godown made it evident that it was quite large, making it impractical to park the truck outside and carry the stacks of sugar bags for loading. More importantly, it was the customary practice to drive the truck into the godown, and there was no reason for the insured to anticipate that this time a spark would emanate from the truck's silencer. So the Commission concluded that it would be incorrect to hold the insured to be negligent as contended by the insurance company on the basis of the survey report.

On the question of quantum, the National Commission observed that the insured had claimed for a loss of 350 quintals of sugar while the surveyor had assessed it to be 250 quintals. Since no evidence had been produced by the insured to show that the assessment was not correct, the Commission held that the loss quantified by the surveyor would have to be accepted.

The insured contended that the damaged sugar had not been segregated when the surveyor had visited the premises to assess the loss and that the surveyor should have come for a fresh assessment after segregation to verify the quantity of the damaged sugar. The Commission did not accept this argument as the insured had failed to request for a revisit for reassessment after segregation.

The cost for reprocessing the damaged sugar was estimated by the insured to be Rs 400/quintal while the surveyor had computed it at Rs 160/quintal. The Commission pointed out that there was no evidence to prove the cost to be higher than what was assessed, so it held that the assessed rate would be applicable.

Accordingly, by its order of January 31, 2020, delivered by Justice V K Jain, the National Commission set aside the order of the State Commission and directed the insurer to settle the claim by paying Rs 7,60,000. Since six months was considered a reasonable time to settle the claim from the time it was lodged, the Commission awarded 9 per cent interest for the period of delay in making payment.

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