Malappuram, Kerala: The Consumer Commission has delivered a landmark verdict, directing the United India Insurance Company to pay a total compensation of ₹3,610,000 for unjustly denying an insurance claim to a businessman whose shop was completely gutted in a fire.
The order was issued on a petition filed by Balachandran Nair, the owner of C.K. Toys in Perinthalmanna. Mr. Nair’s shop, which operated on a ₹25 lakh loan from Kerala Gramin Bank, was insured for ₹35 lakh. Despite timely premium payments, the company denied the claim following a devastating fire on the night of August 16, 2021.
Commission Rejects Insurer’s Arguments
The insurance company argued that they denied the claim because the claimant failed to produce necessary documents to prove the loss and that the insured shop’s number and accident location were different.
However, the Commission, consisting of President K. Mohandas and members Preethi Sivaraman and C.V. Mohammed Ismail, rejected these arguments. They stated that the insured shop was indeed the one destroyed and that the company’s argument about the lack of documents was invalid, as all records had perished in the fire itself.
The Commission accepted the stock register maintained by the bank (which sanctioned the ₹25 lakh loan) as sufficient evidence. Since the stock register showed a monthly stock value of over ₹35 lakh, the Commission ordered the insurer to pay the full insured amount of ₹35 lakh.
Compensation for Delay
Furthermore, the Commission penalised the insurer for the delay in settling the claim since the 2021 incident, ordering an additional ₹1 lakh as compensation and ₹10,000 towards court costs.
This ruling underscores the necessity for insurance companies to honour legitimate claims and prevents them from exploiting policyholders based on technicalities, especially when documentation is destroyed in the very incident being claimed.
