HYDERABAD: The District Consumer Disputes Redressal Commission - I, Hyderabad has directed Reliance General Insurance Co. Ltd. to pay Rs 1.32 crore along with interest to a city-based industrial firm, holding the insurer guilty of deficiency in service for delaying the issuance of a renewed policy before a major fire accident.
According to the complaint, Indus Chem, a hazardous waste pre-processing unit based in Telangana, had obtained a “Bharat Sookshma Udyam Suraksha” policy covering plant, machinery, and stock for `5 crore for the period December 15, 2021, to December 14, 2022.
While renewal attempts in December 2022 failed due to insufficient funds, the premium of Rs 93,240 was successfully debited from the firm’s bank account on February 21, 2023, through ECS. Just three days later, on February 24, 2023, a major fire broke out at the factory premises, causing extensive damage.
The insurer appointed a surveyor, who assessed the loss. However, the company later repudiated the claim, stating that the renewed policy was issued only on February 27, 2023 — after the date of the accident — and therefore there was no coverage at the time of the fire.
Rejecting the insurer’s contention, the Commission observed that once the renewal premium was accepted on February 21, 2023, the insurance contract became effective from that date, regardless of when the physical policy document was issued.
The bench held that delaying the issuance of the renewal policy until after the accident amounted to negligence and unfair trade practice. It noted that in renewal cases, coverage takes effect from the date of receipt of premium. “The opposite parties ought to have issued the policy immediately,” the Commission stated, adding that holding the matter for six days without valid reason constituted deficiency in service.
Although the complainant had sought `4.44 crore in damages based on estimates from the fire department and a private assessment, the Commission relied on the insurer-appointed surveyor’s report, which assessed the loss at `1,32,59,547. The Commission ordered payment of the same amount to the complainant, interest at 7% per annum from December 6, 2023 (date of complaint) until realisation, `30,000 towards litigation costs, and compliance within 45 days.