Jammu & Kashmir High Court Rules Insurance Claims Cannot Be Reduced Due to Government Relief Received by Insured
The Jammu & Kashmir High Court ruled that an insurance company cannot reduce the claim amount based on the insured receiving government relief, stating it is not within the company's purview to consider compensation from other sources.
10/15/20241 min read
Not the business of Insurance Company to see whether the person suffering damages has been paid some sort of relief from other source.
Anil Kohli had insured his business, Shalimar Wine Shop, with Oriental Insurance for coverage up to ₹22 lakh. In 2013, the shop suffered significant damage during riots in Kishtwar, Jammu and Kashmir. As part of the government's relief efforts, Kohli received ₹3.5 lakh in compensation from the Jammu and Kashmir government.
The shop's damages were estimated at ₹29.24 lakh, and the owner submitted a claim to Oriental Insurance. Following the company's assessment, the payable amount was determined to be ₹19.11 lakh. However, Oriental Insurance offered only ₹15.61 lakh, deducting the ₹3.5 lakh granted by the government as ex gratia relief. Dissatisfied, the claimant approached the Jammu and Kashmir Consumer Disputes Redressal Commission, which ruled in his favor, directing Oriental Insurance to pay the full ₹19.11 lakh along with ₹10,000 in litigation costs.
Unhappy with the Consumer Commission's decision, Oriental Insurance appealed to the Jammu and Kashmir High Court. However, the High Court dismissed the appeal, emphasizing that the damage to the wine shop exceeded the insured amount of ₹22 lakh. The Court held that Oriental Insurance could not reduce the claim payment of ₹19.11 lakh simply because the government had provided ₹3.5 lakh as ex gratia relief.
The Court stated that once the insurance company has accepted the premium, it cannot refuse to pay the insured amount up to the policy limit.