Kalina man wins 32 lakh over July 2005 floods loss

In what is probably the highest insurance payout for the 2005 deluge in Mumbai, the State Consumer Commission has ordered New India Assurance Company to pay Rs 32 lakh to a Kalina businessman. The amount comprises a little over Rs. 20 lakh as insurance, and Rs 12 lakh in interest since December 2005, when the insurance company rejected the claim.

Noor Sheikh owned a shop at Kurla-Kalina Road in Santacruz by name of Steel & Steel Traders, which used to trade in various types of laminates for transformers. He had insured the stock at his shop under the “Standard Fire and Special Perils Policy” for Rs. 65 lakh, and the policy was in effect during the July 2005 deluge.

According to Sheikh’s claim with New India Assurance, he suffered a loss of over Rs. 28 lakh. Of this, Rs. 20 lakh of stock was categorised as “swept/carried away with flood water and lost”, while the remaining was damaged by flood water and mud.

The insurance company appointed a surveyor, who submitted a report in October 2005, and later made some corrections in December, which estimated the loss at Rs 20,15,493. New India Assurance, however, rejected the claim on various grounds. One of these was that Sheikh had made sweeping statement about losses and that their investigator doubted the authenticity of most of the bills of purchase he had provided.

On this point, the commission observed that Sheikh had explained all the transactions specifically in his reply. It also observed that everything was cross-checked and accepted by the insurance company’s surveyor, and that the attitude of the insurance company in rejecting the claim “was not only improper, but reflected that company was acting arbitrarily while repudiating the claim”.

Another reason why the claim was initially rejected was that in its report submitted in October that year, the surveyor had said that Sheikh was carrying out manufacturing activities from the shop, which was not covered in the policy. The commission observed that the company neglected the correction made by the surveyor in that regard in December that year.

The final reason the company had given for rejecting the claim was that the stock that was supposedly swept away was not found some distance from the store. The commission observed that the company did not make any effort to trace the swept away stock.