No Proof, No Payout: Court Overturns Order in Insurance Claim Dispute.


23 July 2025 Consumer Protection Act >> Consumer Rights  

A consumer court has overturned an order that required an insurance company to pay damages for a building, ruling that the claimant failed to provide sufficient evidence to support his claim. The court found that the alleged damage was not caused by a peril covered under the insurance policy and that the claimant had not fulfilled his burden of proof.

The case involves Ranjot Singh, who owned a three-story residential building insured by National Insurance Co. Ltd. Initially, the building was insured for Rs. 6 lakh. In September 2014, the coverage was increased tenfold to Rs. 60 lakh after a spot visit by the insurance company's agent.

 
 
In January 2015, Singh filed a claim, asserting that heavy rainfall, vehicular vibrations, and water diversion from a nearby road caused extensive damage to his building. The insurance company, however, repudiated the claim, citing several reasons:

  • The building was in a dilapidated condition, as evidenced by a Sub-Divisional Officer’s (SDM) notice dated September 29, 2014, which ordered its demolition.
  • The claimant had misrepresented the condition of the property when he requested the enhanced insurance coverage.
  • The building was under construction and unoccupied.
  • Meteorological data showed no heavy rainfall on the dates claimed.
  • There was an unexplained 45-day delay in reporting the damage.
  • The damage was caused by non-covered perils, such as defective construction and gradual deterioration due to water seepage.
A State Commission initially ruled in favor of the claimant, awarding him damages and compensation. However, the insurance company appealed the decision.
Upon review, the consumer court found that the claimant failed to prove his case. While the court gave the claimant the benefit of the doubt regarding the disclosure of the building’s condition, it focused on the lack of proof for the cause of the damage. The court pointed out that:

  1. Burden of Proof: The claimant, who asserted that heavy rainfall caused the damage, failed to provide any meteorological data to substantiate his claim. The insurance company, on the other hand, submitted data from nearby areas showing no rain on the specified dates.
  2. Causation: The claimant's own expert reports indicated that the damage was due to gradual water seepage from neighboring properties, not a sudden, insurable event.
  3. Policy Exclusions: The court determined that even if some damage had occurred, it was a result of gradual deterioration, which is a specific exclusion under the policy's Subsidence Clause.

Based on these findings, the court concluded that the loss was not covered by the insurance policy. It set aside the State Commission's order, dismissed the consumer complaint, and ruled that the insurance company was not liable for any deficiency in service. The decision underscores the importance of a policyholder's responsibility to provide clear evidence to support an insurance claim.


Section 19, Consumer Protection Act - 1986  
Consumer Protection Act, 1986