Insurance claim repudiated for lack of link between insured risk and loss

The National Commission concluded that the collapse of the building could not be attributed to an insured risk: heavy rain, flood, inundation, storm, and so on

Maa Danteswari Cold Storage, a partnership firm established in 2008, had obtained a standard fire and perils policy from Reliance General Insurance for the period November 30, 2009, to November 29, 2010. 

On June 19, 2010, the roof of the building housing the cold storage collapsed. The insured immediately informed the insurance company, attributing the incident to heavy rain and inundation. The insurer appointed a preliminary surveyor and 

subsequently a final surveyor to assess the claim. The survey report observed that there was some rainfall on the date of the incident, but no cyclonic storm. The insurer sought an explanation to establish the cause of the roof collapse. Since it received no response, the insurer sent a letter dated June 19, 2012, repudiating the claim on the ground that there was no evidence that any peril referred to in the policy had caused the loss. 

The insured challenged the repudiation by filing a complaint before the National Consumer Disputes Redressal Commission (National Commission).  The insured relied on the clause under which storm, cyclone, typhoon, tempest, hurricane, tornado, floods and inundation were listed as risks covered under the policy. 

The insured argued that inundation and adverse weather conditions led to the collapse of the building, resulting in complete damage to the plant and machinery. The insured relied upon a report given by the sub-inspector of police, which stated that “during enquiry it came to light that the cold storage completely collapsed due to heavy rain and wind.” The insured also relied on Google’s weather reports of June 18, 19, and 20, 2010. 

The insured also argued that it had taken a loan from UCO Bank and that non-settlement of the claim would result in a loss of public money as the loan amount would remain unpaid. 

The insurer contested the case, contending that there was some rain but no cyclone or storm. It justified the repudiation on the ground that the insured had produced no evidence to establish that the roof of the cold storage collapsed due to heavy rain and inundation, and had failed to respond to a query on this issue. Hence, the insurer argued that it had rightly rejected the claim. 

The Commission observed that the claim form did not disclose the circumstances leading to the loss. The insured attempted to argue that they were laymen who simply signed the claim form, which an official of the insurer had filled up. The Commission refused to accept this argument, holding that it was unbelievable that the insured, who had signed in English, had affixed his signature without reading the claim form. 

Besides, the information given by the insured to the police nowhere referred to inundation but mentioned only heavy rain and wind. The insured filed no report from the Meteorological Department or from any other administrative authority to confirm a heavy downpour of rain or strong winds in the nature of a storm or cyclone. The material downloaded from Google merely indicated winds of 8 miles per hour and some clouds, without any reference to rainfall. 

In its order of March 30, 2026, delivered by Justice AP Sahi and Bharatkumar Pandya, the National Commission concluded that the collapse of the building could not be attributed to a risk insured under the policy as there was no proof of heavy rain, flood, inundation, storm, etc. Hence, it dismissed the complaint, holding that the insurer had rightly repudiated the claim. 

The writer is a consumer activist