The District Consumer Commission in Shimla has directed Oriental Insurance to pay Rs 1.25 crore to a homeowner whose ancestral property was completely destroyed in a 2023 fire, rejecting the insurer’s attempts to reduce the payout over documentation demands and co-ownership claims.
In its July 2 order, a bench comprising President Baldev Singh and Member Nidhi Sharma also awarded the policyholder Rs 75,000 as compensation for mental harassment and Rs 25,000 for litigation expenses. The commission ruled that the insurance company engaged in delay tactics and failed to provide proper service.
Total Loss and Insurer’s Refusal
The case stems from a major fire on September 2, 2023, in Daroti village, which completely destroyed the complainant’s 30-room, 60-to-70-year-old ancestral home along with all contents inside. The property was insured under an Oriental Insurance Bharat Griha Raksha policy for Rs 1.25 crore covering the period from December 9, 2022, to December 8, 2027.
Although independent assessments evaluated the total damage at Rs 2.70 crore and later Rs 2.93 crore—exceeding the policy coverage—Oriental Insurance did not settle the claim after the incident. The homeowner issued a legal notice and subsequently approached the consumer commission, citing unfair trade practices and deliberate withholding of funds despite having submitted all necessary paperwork.
Insurer Arguments Rejected
Oriental Insurance argued before the commission that the claim could not be processed due to missing documents and an exaggerated loss estimate. The company asserted that its own surveyor evaluated the net payable loss at Rs 80.17 lakh. Furthermore, the insurer claimed the property was ancestral with nine co-owners, contending that the policyholder was entitled to only a one-ninth share of the assessed amount.
The commission dismissed the insurance company’s arguments, noting that official records from the local Patwari, Tehsildar, and Fire Officer confirmed the house was entirely destroyed. The bench stated that the insurer could not evade contractual responsibilities by raising ownership disputes after issuing the policy, especially since other family members had already confirmed they had no objection to the complainant receiving the insurance payout.
Defects in Assessment
The commission also criticized the surveyor’s loss assessment as self-contradictory. While the surveyor recognized that the property’s insured value had risen under the policy terms, the assessment arbitrarily applied a flat 50 percent depreciation rate and deducted salvage value without providing valid justification.
Finding that the structure suffered a total loss during the active policy period, the commission concluded that Oriental Insurance’s repeated demands for paperwork were unjustified delay tactics, ordering full payment of the insured sum along with damages.
