In a strong message to insurance companies, the Delhi State Consumer Disputes Redressal Commission has ruled that rejecting an insurance claim without solid proof is unfair and amounts to deficiency in service. The Commission made it clear that claims cannot be denied based only on doubts, assumptions, or personal opinions.
The ruling was delivered by a bench led by Justice Sangita Dhingra Sehgal along with Member Bimla Kumari. The Commission dismissed the appeal filed by Oriental Insurance Company Ltd. and upheld the earlier order that directed the insurer to settle the claim in favour of the policyholder.
The case involved Praveen Kumar Sharma, who had taken a Householder Insurance Policy from Oriental Insurance Company Ltd. for the period from December 2009 to December 2010. The policy covered household items, including gold jewellery worth over ₹18 lakh, based on a valuation report prepared by an approved valuer and accepted by the insurance company.
In January 2010, while travelling on his scooter, Sharma lost a pouch containing his wife’s gold jewellery. He immediately reported the loss to the police by filing a Non-Cognizable Report and informed the insurance company the very next day. A surveyor appointed by the insurer assessed the loss at around ₹17.75 lakh but raised doubts about how the jewellery was lost.
Relying mainly on these doubts, the insurance company rejected the claim, saying that the complainant did not take reasonable care, did not submit purchase bills, and that the incident seemed improbable. Feeling wronged, Sharma approached the District Consumer Commission, which ruled in his favour and ordered the insurer to pay the assessed amount along with interest and compensation.
The insurance company then challenged this decision before the Delhi State Commission, arguing that carrying costly jewellery while travelling was careless and that the lack of purchase bills made the claim doubtful. However, the State Commission did not accept these arguments.
The Commission observed that the insurer had issued the policy after accepting the valuation report and collecting the premium. Once the policy was issued on that basis, the insurer could not later question the ownership or value of the jewellery after a loss had occurred. It also noted that the complainant acted responsibly by promptly informing both the police and the insurer.
The Commission clearly stated that rejecting a claim only on suspicion, without any strong supporting evidence, is not legally valid. Such action, it held, is arbitrary and unfair to consumers.
As a result, the appeal was dismissed, and the order directing the insurance company to pay the claim amount with interest and compensation was upheld, reinforcing consumer rights against unjust insurance claim rejections.
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