Insurer can’t change surveyor at its whim :

An insurance company cannot appoint one surveyor after another till it gets a report favourable to it, the Supreme Court asserted in its recent judgment in the case, New India Assurance vs. Luxra Enterprises.

An insurer can reject a survey report, but it must give cogent reasons for doing so, pointing out inherent defects in it or it was arbitrary or excessive. In this case, there was a fire in the garment factory. It claimed Rs. 55 lakh under the insurance policy.

New India appointed a surveyor who allowed the full claim. Then, the insurer appointed another firm as surveyor which reduced the claim to Rs.25 lakhs. Still dissatisfied with the report, New India appointed a third surveyor who recommended repudiation of the whole claim.

Aggrieved by the total rejection, the garment factory moved the National Consumer Commission. It allowed the full claim but without interest, Both sides moved the Supreme Court.

The Apex Court dismissed the appeal of New India observing that “the appointment of surveyors was to repudiate the claim on one pretext or the other. It also granted 6 percent interest on the amount to the garment firm which had been overlooked by the National Commission.

SC upholds insurance claim rejections :

Life Insurance companies won three cases in the Supreme Court last week as it upheld the rejection of claims on various grounds. In its judgment in one of these three cases, Reliance Life Insurance Co. vs. Rekhabai, the court set aside the order of the National Consumer Commission which allowed the claim.
The deceased had taken life policies from both Reliance and Max New York. The wife collected money from Max and then approached Reliance with a claim. Reliance stated that her husband had not disclosed that he had another policy, which was against the principle of utmost good faith in insurance law.
The court accepted the argument. It also rejected her excuse that the policy was filled up by the insurer’s agent and her spouse had only signed it. The court stated that when the form is filled up, the agent was not acting on behalf of the insurer but as that of the insured. The court, however, allowed the woman to keep Rs. 5 lakh paid by the insurer according to its interim order.