Mumbai hotel gets Rs 1.76 crore insurance claim for storm damage.
NEW DELHI
In landmark judgment, the apex consumer court has directed an insurance company to pay a claim of Rs 1.76 crore to a Mumbai-based hotel which suffered damage due to strong winds, ruling that winds up to the speed of 80 kmph may not fall in insurer’s definition of a “storm” but is strong enough to leave a trail of destruction for which a claim cannot be denied.
The insurance company, National Insurance, insisted on not considering the strong winds faced by Sahara Hospitality’s Hotel Sahara Star as storm and refused to pay the claim. The insurance company stuck to its stand of following the Beaufort Scale for defining a storm. The scale is an empirical measure that relates wind speed to observed conditions at sea or on land. As per this scale’s definitions, only winds between 89-102 kmph or above are considered as storm.
National Consumer Disputes Redressal Commission president A.P. Sahi said, “The contention raised on behalf of the insurance company deserves to be rejected and the repudiation deserves to be held as unjustified. There is therefore a clear deficiency in service as the insurance company has erroneously declined to indemnify a valid claim.”
After the Commission’s verdict, the insurance company has the option of challenging the decision before the Supreme Court. Justice Sahi dismissed the insurer’s decision to refute the claim and said, “One has to adopt a reasonable approach and in the opinion of this Commission a storm with a wind speed of 80 kms/hr. would reasonably stand included under the policy risk in the light of the other definitions that have been referred to including the Weather Report itself.”
“Applying the contra proferentem rule even if there is an ambiguity in understanding the meaning of the word ‘storm’, the same has been clarified hereinabove and therefore the same should be read in favour of the insured as it does not violate any terms of the policy or any law declared in this respect,” said the Commission in a recent decision.
The court said the dispute relates to an insurance claim arising out of an incident on 11 June, 2008 stated to have occurred between 2.45 pm to 3.35 pm. A temporary structure covered with tarpaulin was blown off on account of certain high wind speeds that fell on the dome of the insured structure causing damage which has given rise to the claim.
It said the question which arises for consideration after having heard the learned counsel, can be clearly located to the repudiation by the insurance company which proceeds on the ground that the speed of the wind which was approximately 80 kilometres an hour did not qualify as a storm keeping in view the Beaufort Scale which defines the speed of a storm between 89 km to 102 km an hour. Thus, the damage was not due to any storm as such not a covered risk under the policy. This repudiation dated 18 November 2010 gave rise to this complaint which was instituted in 2011.