Benefit of Doubt Must be Given to the Insured in Cases Involving Questions Over Admissibility

Anup K Thakur, member of the National Consumer Disputes Redressal Commission passed an order stating that whenever there is a doubt over the admissibility of an insurance claim, the benefit of the doubt should be given to the insured. 

The owner of a Sharjah bound ship lodged a complaint with NCRDC after his insurance claim was rejected by the insurance company.

The order was passed while dealing with an insurance claim in relation to a vessel that sank on its way to Sharjah, the owner of the vessel approached the NCDRC after the insurance claim was repudiated by the insurance company. The claim was refused on the basis that vessel, when it set for sail, was seaworthy and certified to be so by the authorities. it sank because of some unrecognised object hitting it from below and causing a breach in the hull. Further, it was highlighted that the breach was so large that in spite of the crew pumping water for over three hours, the ingress of water could not be controlled. 

Also, the first surveyor supported the complainant and contended that the incident happened because of an unidentified object hitting the vessel from below. This contention was rejected by the investigator of OP, according to whom an unrecognised object couldn’t have been the cause of the accident. The investigator, relying upon cash invoices for maintenance, stated that vessel was poorly maintained. 

NCDRC ordered OP to pay an amount of Rs. 1,75,00,000 with 6% interest to the complainant 

In light of the contentions raised by both the parties, the NCDRC observed that it didn’t agree with the opinion of the OP's investigator. it pointed out the vessel had all the necessary documents required for sailing and there was no reason to believe that it was not seaworthy at the time of sail. 

Also, a badly maintained vessel couldn’t have led the first surveyor to conclude that the vessel was in fit condition. The vessel would not have been allowed to sail by the relevant authorities in that case.

NCDRC further said that the payment of over Rs. 20,000 in cash may be in violation of banking laws but doesn’t mean that the vessel was badly maintained.   

The OP  had the right to appoint a second investigator. it was mistaken in accepting the investigator’s report in toto and making it the basis for the repudiation of the claim. NCDRC added 

Reference was also made on the final letter of repudiation received in June 2012. The NCDRC held the complaint to be within the period of limitation and therefore the NCDRC passed an order to OP to pay an amount of Rs. 1,75,00,000 with 6% interest. The NCDRC in view of the interest on the insurance amount said that there couldn’t be a separate compensation for mental agony and loss of business.