SRINAGAR — The Jammu and Kashmir High Court on Friday directed insurance companies to pay 50 per cent of the insured amount for policies above Rs 25 lakh and 95 per cent for policies below Rs 25 lakh as interim relief to the flood-affected people in the State.
“We feel that policy in respect of shopkeepers needs to be effectively implemented. Under the caption ‘Stock Loss’, it has been contemplated that cases with a sum insured is up to Rs 25 lakh, then after making 5 per cent deduction towards dead and obsolete stocks is to be considered as the basis of settlement,” a division bench of the High Court comprising Chief Justice M M Kumar and Justice Ali Muhammad Magrey said in an 11-page judgment.
“The insured is to be given the option to accept sum insured less by 5 per cent,” the bench observed. The bench was hearing a petition filed by the Kashmir Chamber of Commerce and Industry (KCCI).
Elucidating the order, the bench said; “In other words, 95 per cent of the sum insured has to be disbursed in case of policy involving Rs 25 lakh or less. In the case of the policies with a sum insured up to Rs 25 lakh, the shopkeepers’ policy should be strictly followed as observed. In respect of the policies with sum insured above Rs 25 lakh, 50 per cent of the assured amount shall be released after receiving an undertaking from the insured and also filing of the undertaking by the officer concerned of the insurance company,” it said.
The court further directed that the policy decision of the General Insurers Public Sector Association (GIPSA) should be strictly complied with.
“With respect to the policy where the sum insured is above Rs 25 lakh, it has been stated that 50 per cent of the assessed and estimated loss will be released after receipt of the preliminary survey report. We feel that further categorization is required to be kept in view while implementing the policy which involves a sum insured beyond Rs 25 lakh. This clause may not be applicable to shopkeepers who have stocks of eatables, food, items, clothes, shoes, readymade garments, hosiery, cosmetics, chemists and the provision stores,” the bench observed.
The court held that the reason for the aforesaid approach is that in the Lal Chowk, Residency Road, Hari Singh High Street, Karan Nagar, Batwara, Shivpora and Batamaloo, a large number of shops must have filed claims and in all these areas the water was up to 18 feet high.
The court ruled that if the insurance companies follow the policy of total losses in cases were sum insured is more than Rs 25 lakh, then 50 percent of the sum insured in the policy shall be disbursed subject to the filing of undertaking by the insured as well as by the insurance company saying at the time of final settlement the deficiency shall be made up by either of the parties.
In response to the statement by Advocate Khuru appearing for the national insurance company that 1700 claims have been received out of which only in five cases of claims preliminary survey reports have been received and thus claims have been settled, the court said the policy stipulates that it is a social responsibility of all the insurers to settle all the claims arising out of the floods in the state at the earliest and the norms require to be relaxed.
“The aforesaid example of National Insurance Company completely defeats the policy decision of GIPSA,” the court observed while citing the policy decision.
Senior counsel Z A Shah representing the claimants pleaded before the court that Bajaj Allianz Company has received 3000 claims and has not been able to finalize a preliminary survey report despite the fact that Jammu and Kashmir Bank is an associated finance company of Bajaj Allianz. He argued in the case of the National Insurance Company, only five out of 1700 cases preliminary survey reports have been received.
“There are sample cases which would show that if we keep on waiting for preliminary survey reports, then the claim may not be settled for years whereas the situation prevailing in the state cries for immediate solution,” Shah argued.
The Court directed the four insurance companies—National Insurance Company, New India Assurance Company, United India Insurance Company and Oriental India Insurance Company—to file compliance reports in keeping with the GIPSA decision by the next date of hearing.
The court also directed the insurance companies to hold a joint meeting with KCCI office bearers to reach an amicable solution of claims, saying the result of the meeting be placed before the court before the next date of hearing.
The court also asked Chairman J&K Bank to meet the grievances of the insured in tune with the scheme formulated by the National Legal Services Authority and adopted by the Jammu and Kashmir State Legal Services Authority.
Citing the policy decision taken by GIPSA with regard to the claims of J&K floods, the court said where the stock is totally damaged, then a certificate by the Sarpanch or a school teacher or any responsible person of the area would be sufficient. The court did not agree with Advocate N H Khuroo that it would apply only to cases where the stock has been totally washed away.
“In a catastrophe of such a magnitude as has been confronted by the insured in Srinagar and other parts of the state like Poonch-Rajouri, such type of literal construction needs to be avoided. The policy decision taken by GIPSA itself does not follow any linguistic approach. Therefore, a humanistic approach is to be followed,” the court observed.
Clarifying, the court said if a building has collapsed with stocks and the flood waters entering the building then literally speaking it may not be said that contents were totally washed away yet it would be a case of complete loss of stock. “In such a situation, the linguistic approach by the company would require to be avoided and humanistic approach is required to be adopted and policy requires to be implemented in letter and spirit,” the court said.
