SC rules in favour of NIA over right to reject insurance claim

By: | Published: August 23, 2018 3:44 AM

An insurance company’s right to reject a claim on account of delay in intimation does not get waived if it appoints a surveyor to assess the damage, the Supreme Court has held.

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An insurance company’s right to reject a claim on account of delay in intimation does not get waived if it appoints a surveyor to assess the damage, the Supreme Court has held.

While ruling in favour of the New India Assurance Co, a Bench comprising chief justice Dipak Misra and justices AM Khanwilkar and DY Chandrachud rejected Sonell Clocks and Gifts Ltd’s plea that the insurer waived its right to declare that the claim could be entertained if it appoints a surveyor to facilitate an investigation into the cause of damage and nature of loss even after delayed intimation.

“That contention cannot be taken forward at the instance of the appellant (Sonell) who has failed to fulfill the threshold stipulation contained in Clause 6 of the general conditions of the policy and for which reason must suffer the consequence. It is not a technical matter but sine qua non for a valid claim to be pursued by the insured, as agreed upon between the parties,” the apex court said, while rejecting its stand that genuine claims should not be rejected on mere technical grounds.

“We uphold the conclusion of the National Consumer Disputes Redressal Commission (NCDRC) that the insurer had not waived the condition relating to delay stipulated in Clause 6 of the general conditions of the policy by appointing a surveyor. Accordingly, these appeals must fail,” it held, adding that “there must be a specific plea of waiver, much less of abandonment of a right by the opposite party”.

Sonell had in 2004 insured its building, plant and machinery for `2.87 crore from New India Assurance Co for a year. As a result of torrential rains and floods, severe damage was caused to the machinery and the raw material lying in the factory premises on August 4, 2004. However, intimation of the loss to the insurance company was given after around four months. New India Assurance Co rejected the claim after its surveyor stated that the claim was not payable on account of the failure of the complainant to give notice of any loss caused to its property within 15 days after the damage or loss was caused.

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