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Insurance firm directed to pay Rs. 50,000 as compensation for denying claim

HT Correspondent, Hindustan Times  Chandigarh, November 14, 2013
First Published: 00:35 IST(14/11/2013) | Last Updated: 00:36 IST(14/11/2013)

The district consumer disputes redressal forum has directed United India Insurance Company Limited to pay Rs. 50,000 as compensation for rejecting an insurance claim filed by Sector 20-based Bombay Cloth House.

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Disposing of a complaint by Arun Mahajan, owner of Bombay Cloth House, Sector 20, Chandigarh, the forum on November 6 directed the insurance company to pay Rs. 9.43 lakh as assessed by the surveyor along with paying Rs. 10,000 as the cost of litigation.

Mahajan, had moved the forum saying that it got its stocks and fittings insured from United India Insurance Company Limited under shopkeepers' insurance policy in December 2011. 

He added that on the intervening night of December 11and 12, 2011, a fire broke out in the shop, in which stocks of clothes, fittings, furniture among other things got completely destroyed.

Mahajan on the asking and verification of the surveyor, wrote a letter to the insurance company informing them that it is the franchisee of Duke Fashion (India) Limited, adding that no stock of any other company or individual was sold or stocked.

He alleged that the insurance firm repudiated his claim in January 2013 on the ground that the complainant had no insurable interest. United India Insurance Company Limited justifying rejecting the claim said Bombay Cloth house was merely a custodian of the stock, damaged in the fire, which belonged to Duke Fashions (India) Limited and thus the complainant had no insurable interest in the stock damaged in the fire.

Duke Fashions (India) Limited in its separate reply pleaded that as per the agreement with the complainant in case of any loss/damage of stock, the complainant was to indemnify it.

Consumer forum presided by Rajan Dewan said: “From the report of the surveyor, which is very detailed, it is amply clear that there was no stock other than that of Duke in the premises and that the complainant had insurable interest in the same.  Hence, the repudiation of the claim by the insurance company certainly amounts to deficiency in service on their part.”

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