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Sonell Clocks and Gifts Ltd. v. The New India Assurance Co. Ltd. - (National Consumer Disputes Redressal Commission) (25 Oct 2016)

Insured is required to intimate loss or damage to insurer expeditiously and within a reasonable time



As complaint was dismissed by Commission, review petitioner/complainant preferred an appeal before Supreme Court. In terms of liberty granted by Supreme Court, present review petition has been filed by complainant. In view of specific direction of Supreme Court, scope of review petition is restricted to issue as to whether Respondent insurer had waived the condition related to delay in intimation, by appointing a surveyor.

Clause-6 of Insurance Policy, required insured to forthwith give notice to insurer on happening of any loss or damage. It is an admitted position that instead of rejecting claim out rightly on account of delay in intimating loss to it, insurer appointed a surveyor to visit premises of complainant/review petitioner and assess loss sustained by it. Surveyor so appointed by insurer submitted his report dated 29th December, 2004, assessing the loss suffered by complainant but also pointed out delay in intimating the loss to the insurer, despite repeated reminder, resulting in breach of condition No. 6 of the insurance policy. He therefore, recommended that the loss was not payable.

Term "immediately" or "forthwith", when used in an insurance policy does not always mean that, insured should report loss to insurer the very moment or the very day it happens. Insured is required to intimate loss or damage to insurer expeditiously and within a reasonable time. What a reasonable time would be depends upon the facts and circumstances of each case though it can hardly be disputed that, imitation should be given without deliberate loss of time. If an explanation is given by insured for delay in reporting loss to the insurer, such an explanation also needs to be considered firstly by insurer and if the matter is taken to a Court/Forum by said Court/Forum. Delay in reporting the loss to insurer ought to be unusual and if a satisfactory explanation even for an unusual delay is given that explanation needs to be examined on its merit. Therefore, it would be difficult to say that in every case of delay in reporting the loss, insurer instead of appointing a surveyor should straightway reject the claim on account of the said delay, and appointment of the surveyor would amount to waiving right of the insurer to reject the claim on account of breach of condition requiring immediate/forthwith information of loss.

If insurer straightway rejects the claim, without appointing a surveyor, solely on ground of delay in reporting the loss to it, that may result in a situation where it may not be possible to reasonably assess the loss even in a case where the insured has a reasonable explanation to offer for the delay in reporting the loss to the insurer. On the other hand, no prejudice at all is caused to the insured by appointment of a surveyor to assess the loss alleged to have been sustained by him since even if the claim is later rejected on account of the delay in reporting the loss to the insurer. In such a case if the Court before which the decision of the insurer is challenged, comes to the conclusion that rejection of the claim solely on the said ground was not justified in the facts and circumstances of the case, it will be in a position to award appropriate compensation based upon the report of the surveyor. In the absence of such a report the Court will be severely handicapped in awarding appropriate compensation to the insured.

Facts and circumstances of case however, do not indicate an intentional and conscious relinquishment, by insurer, of its right to reject claim on account of delayed intimation of loss, by appointing a surveyor to assess loss claimed by insured. Said appointment, was as a matter of practice and caution so that an appropriate decision on claim may be taken by complainant Authority, in light of report of surveyor and terms and conditions of insurance policy.


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