One of the policies was for Rs 2 crores, which covered the building, stocks of milk, milk products, ghee, butter, dairy products. As well as packaging and other material connected to the company’s business.
On February 7, 2012, a fire broke out in the insured premises. The fire brigade was summoned, the police was informed, and the insurer was intimated. The surveyor who was appointed by the insurer carried out the survey and submitted his report in which he assessed the total loss of stock at Rs 56,42,954, and packing material at Rs 40,17,572.08 ps, after considering salvage and other deduction.
A dispute arose because the insurer paid only Rs 2,35,356, for damage of packing material. So, a complaint was filed before the Haryana State Commission. The insurer contested it on the ground that the claim was rightly settled by applying the average clause according to the limits of coverage limit under each head of insured risks.
The State Commission partly allowed the complaint, and ordered the insurer to pay Rs 40,17,572.08 towards loss of packaging material as assessed by the surveyor, but did not grant any compensation. So both parties, the insured as well as the insurer, appealed against the order.
The National Commission observed that regardless of the break up of coverage under the other three policies, the policy of Rs 2 crores did not contain any such bifurcation of the risk under various heads, and that it had an overall coverage which included building, stocks as well as packaging materials. So it held that the insurer was wrong in applying limits to the coverage. It upheld the order of the State Commission, and dismissed the insurer’s appeal. It also held that the insured would be entitled to compensation in the form of interest at 9% from the date of the complaint. A period of three months was given for compliance, and if payment was delayed, 12% interest would be payable.
