An insurance company has been ordered to pay in the region of Rs. 11.29 crore (approximately £894,000) to a policyholder for “deficiency in service” regarding a fire insurance claim
As reported by The Hindu, in April 2019, a major fire broke out at a copper and copper-alloy plating unit for steel plants in Tamil Nadu, run by Mipalloy Nomura Plating Company LLP – an India-Japan joint enterprise specialising in manufacturing and engineering services. The factory was “gutted” in the fire and, following forensic reports, was later confirmed to have been caused by an electrical short circuit.
It is understood that the company had been annually renewing a fire and allied perils policy with insurer Liberty General Insurance Company Limited since 2014 (of up to Rs. 28 crore) and had notified them when the incident occurred. Preliminary loss reports and claim documents were also submitted on time, with a total claim made for Rs. 19.07 crore (approximately £1.5 million).
The company stated that the insurer “delayed the investigation and failed to provide a complete survey report”. An interim payment, as per Insurance Regulatory and Development Authority of India (IRDAI) regulations, was also refused. The insurer issued a final survey report in October 2022, almost three years after the fire. In January 2023, the policyholder’s claim was repudiated over email, with the company adding that no formal communication followed.
The firm subsequently went to the High Court to obtain access to the claim and survey documents. The insurer told the Additional District Consumer Commission for Chennai (North) that the factory premises violated fire safety standards, noting the absence of automatic sprinklers and “non-compliance with factory safety rules”. However, evidence seen by the commission showed that the plant was equipped with fire hydrants, alarms, extinguishers, had trained staff, and a valid fire licence. It also held that automatic sprinkler systems were not mandatory.
As reported by Insurance Business, the commission ruled in favour of Mipalloy Nomura Plating Company and instructed Liberty General to pay Rs. 11.29 crore, jointly or severally, with interest at 6% per annum from November 2024. The insurer was also ordered to pay Rs. 5 lakh (approximately £3,900) in compensation “for mental agony and deficiency in service” and Rs. 10,000 (approximately £7,900) in litigation costs.
Commenting on the case, Sanjay Pinto, counsel for the complainant, said: “This landmark ruling should serve as a wake-up call to insurers. In cases of fire insurance, the law is well settled that as long as the policyholder is not the instigator of the fire, the claim must be paid.”