IMFA claims insurance amount for coal loss

Insurance company insists on report by fire brigade

CUTTACK: Is the fire brigade report mandatory to stake an insurance claim against the damage of an insured property in fire tragedy? What would happen if the property owner without seeking the help of fire brigade manages to extinguish the fire? Can he still claim the insured amount? Can the insurance company repudiate the claim for indemnification in the absence of a fire brigade report?

These questions came up before the Consumer Disputes Redressal Commission here in a case and the consumer court on Tuesday ruled that seeking fire brigade report by the insurance company for settling the claim is ‘misconceived’. Accordingly, the consumer commission directed the insurance company to pay the claim to the complainant with interest.

Coal gutted

The complainant was none other than the Indian Metals and Ferro Alloys (IMFA) Limited and it had claimed an amount of Rs. 13.36 lakhs from the Oriental Insurance Company for the loss of coal that caught fire spontaneously in its stockyard. IMFA Choudwar unit that was formerly known as Indian Charge Chrome Limited (ICCL) had taken a Standard Fire and Special Perils Policy (Material Damage) from the insurance company for an assured sum of Rs. 4 crores. ICCL’s coal and coke stored in the stockyard was insured against risk of fire, flood, including the risk of fire due to ‘spontaneous combustion.

However, fire broke out in its stockyard and the entire stock of coal was gutted on Nov. 15, 2000. Since ICCL was equipped with its own fire tenders, it engaged them to extinguish the fire without requisition of government fire tender. The insurance company surveyor immediately surveyed the site and it was assessed that the loss of coal due to fire was Rs. 13,36,595. But when ICCL staked the claim as assessed by the surveyor, the insurance firm rejected the claim on the ground that it was not accompanied by the government fire brigade report.

Following which ICCL, which had by that time merged with its flagship company IMFA, moved the consumer redressal commission. Commission Chairman Justice R.K. Patra and its member Subash Mahatab after hearing the case directed the insurance company to pay a consolidated amount of Rs. 20 lakhs to the complainant.

The court asked the insurance company to pay another Rs. 5,000 to the complainant towards the cost of the case.