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Chandigarh: Insurance firm told pay up ₹3.8L to house owner for damages from internal leakage
The commission directed the firm, Liberty General Insurance Ltd, to pay ₹3.86 lakh to the complainant, Dheeraj Khanna of Khudda Lahora, for the losses he suffered due to this and ₹35,000 as compensation for the harassment faced and litigation costs. They observed that “internal leakage cannot be equated with seepage” and exclusion clauses must be construed strictly.
The Chandigarh state consumer disputes redressal commission held an insurance firm liable for deficiency in service for wrongfully turning down a home insurance claim arising from internal leakage damage.
The commission directed the firm, Liberty General Insurance Ltd, to pay ₹3.86 lakh to the complainant, Dheeraj Khanna of Khudda Lahora, for the losses he suffered due to this and ₹35,000 as compensation for the harassment faced and litigation costs. They observed that “internal leakage cannot be equated with seepage” and exclusion clauses must be construed strictly.
The commission, comprising Justice Raj Shekhar Attri as president and Preetinder Singh as member, held that the damage to flooring, POP, paint and tiles caused by internal leakage was squarely covered under Clause 9 of the House Protection Insurance Policy (Section I – Home Protection), issued by the firm. It set aside the previous order of the district commission’s reliance on Exclusion Clause 4.
Through his counsel Abhishek Sharma, the complainant submitted that he had obtained a home loan of ₹29 lakh from a housing finance company in June 2020. The company acting as an agent of Liberty General Insurance offered a House Protection Insurance policy, which the complainant purchased by paying a premium of ₹14,010 for coverage from August 7, 2020, to July 7, 2025.
Shortly after taking possession of the insured flat, the complainant began noticing internal leakage within the premises. According to his plea, seepage and dampness inside the unit pointed to poor workmanship and inherent construction defects. He argued that despite bringing the issue to the notice of the builder/opposite party, the problem was not permanently rectified. He alleged that he spent ₹6.2 lakh of his own funds on repairs, yet the insurance company repudiated his claims.
The Liberty General Insurance contended that the damage was caused due to internal leakage, which was not covered under the policy’s exclusion clauses. They also alleged that the complainant did not have insurable interest since the property was registered in the names of his parents. The complainant had also made a claim on an alleged theft incident to which the company contended that this was invalid as a proper FIR was not lodged and submitted a delayed complaint. It was further contended that necessary checks had been carried out by the surveyor.
The commission observed that mere allegations of internal leakage are not sufficient. The complainant must establish through credible material that the leakage is traceable to inherent defects in construction and not to subsequent usage or external causes. At the same time, the forum noted that a builder cannot escape liability if defects surface within a reasonable period and are indicative of substandard workmanship.
The commission also examined the surveyor’s report and found arbitrary deductions. It held that only reasonable deductions towards depreciation and salvage could be permitted. It upheld the repudiation regarding the alleged theft incident.
The commission partly allowed the appeal and directed Liberty General Insurance to pay ₹3.86 lakh to the complainant towards loss suffered. They were also directed to pay ₹20,000 as compensation for mental agony and ₹15,000 as litigation costs.
