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THE purpose of insurance is to indemnify the loss suffered by a policy holder. To fulfil that contractual obligation, the insurer has to assess accurately and pr`E9cisely, the loss suffered by the policy holder, and make good the loss. Insurers, however, try their best to somehow scale down the valuation of loss and generally favour those survey reports that suit this purpose. In fact there have been cases where fair assessments by surveyors have been set aside and new surveyors appointed, just to bring down the amount to be paid to the policy holder. This attitude also puts considerable pressure on surveyors, and there have been cases where their estimates have been anything but reasonable and accurate. This, in turn, has forced courts to throw out such guesstimates and make their own calculation of the loss, and direct the insurance companies to pay accordingly. To put it differently, the law courts have made it clear that the surveyor’s quantification of loss has to be fair, just and justifiable. Where it is not so, the courts can well intervene on behalf of consumers. Besides, insurance companies cannot say that they are bound by the reports of such loss appraisal. Take the recent order of the national consumer disputes redressal commission in the case of Oriental Insurance vs Mehar Chand. Here, within two years of purchase, Chand’s vehicle, insured for Rs 4,50,000, met with an accident and was extensively damaged. However, in response to the owner’s claim, all that the insurance company would offer towards repairs was Rs 94,651, even though the garage authorised by the insurance company gave an estimate of Rs 2,45,188. When questioned, its explanation was that the authorised garages usually gave inflated figures, and that they needed to be pruned, and that’s what the surveyor had done. However, it could not explain the basis for such pruning, forcing the highest court in the country to pass adverse remarks about the estimate of the surveyor. Said the commission: "If the authorised garage gives inflated estimate, the insurance company should change the authorised garage and take on their panel such garages which give the correct estimate of damages. Be that as it may, the surveyor is required not only to examine the estimate given, but also give sound and cogent reasons as to why the estimates should not be accepted." Pointing out that the surveyor had given no plausible explanation for disallowing the estimate of the authorised garage, the national commission held that the state commission was fully justified in setting aside the surveyor’s report and making its own assessment of what needs to be paid by the insurer — which was Rs 2,20,699 along with 9 per cent interest from the date of filing the complaint till the date of payment of the amount, and also costs of Rs 2,500 (Oriental Insurance vs Mehar Chand, RP No 3499 of 2009, decided on October 9, 2009). In fact in April this year the Supreme Court upheld a similar order passed by the courts and made it clear that the estimate of the official surveyor is neither sacrosanct nor binding on the insurer or the insured (New India Assurance Company vs Pradeep Kumar, civil appeal No 3253 of 2002, pronounced on April 9, 2009). In this case, a truck that was barely a year old had met with an accident and had been severely damaged, forcing the owner to obtain a bank loan to have it repaired. However, as against his claim of Rs 1,58,409, supported with proper documentation, the insurance company had offered only Rs 63,771 on the basis of an estimate made by a third surveyor. It had argued before the Supreme Court that the courts cannot award Rs 1.58 lakh when the surveyor had assessed the loss at only Rs 63,771. While dismissing this
contention, the Supreme Court said : "Although the assessment of
loss by the approved surveyor is a pre-requisite for payment or
settlement of a claim of Rs 20,000 or more by the insurer, the
surveyor’s report is not the last and final word." These orders
should force insurance companies and surveyors to be far more
methodical, objective and fair in their assessment of the loss and the
reimbursement of that loss.
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