Not a just policy

The purpose of insurance is to indemnify the loss suffered by a policyholder. To fulfill the contractual obligation, the insurer has to assess accurately and precisely the loss suffered by the policyholder and make good the loss. Insurers, however, try their best to somehow scale down the valuation of loss and generally favor those survey reports that suit this purpose. There have been cases where fair assessments by surveyors have been set aside and new surveyors appointed, just to bring down the amount to be paid to the policyholder. This attitude also puts considerable pressure on surveyors and there have been cases where their estimates have been anything but reasonable and accurate. This, in turn, has forced consumer courts to throw out such guesstimates and make their calculation of the loss and direct the insurance company to pay accordingly.

 

To put it differently, the law courts have made it clear that the surveyor’s quantification of loss has to be fair, just and justifiable. Where it is not so, the courts can well intervene on behalf of consumers. In such cases, the insurance companies cannot argue that they are bound by the reports of such loss appraisal.

 

Take the recent order of the National Consumer Disputes Redressal Commission in the case of The Oriental Insurance vs Mehar Chand, RP No.3499. Here, within two years of purchase, Chand’s vehicle, insured for Rs.4,50,000, met with an accident and was extensively damaged. However, even though the garage authorized by the insurance company estimated the cost of repairs to be Rs.2,45,188, all that the insurer would offer was Rs.94,651, saying that the assessment of the garage was exaggerated and the surveyor had pruned it. The commission, however, found no reason for logic in the surveyor’s report for such pruning and directed the insurer to pay Rs.2,30,699 with 9 percent interest calculated from the date of filing the complaint.

 

In fact, in April this year, the Supreme Court had upheld an order of the apex consumer court in a similar case and clarified that the estimate of the official surveyor was neither sacrosanct nor binding – either on the insurer or the insured (New India Assurance Company vs Pradeep Kumar, CA No.3253 of 2002). Here again, the insurer was offering the consumer less than 50 percent of the actual cost of repairs. At least these orders should force insurance companies and surveyors to be objective and fair in their assessment of the loss and reimbursement of that loss.

 

                                                            Published in The Insurance Times, February 2010