Sanjay an individual, wanted to insure his household goods against fire, theft and burglary. He approached a general insurance company for a policy. The insurance company officer had detailed discussions with him and the

CS Professional · Insurance - Law & Practice · PYQS · December 2020
Sanjay an individual, wanted to insure his household goods against fire, theft and burglary. He approached a general insurance company for a policy. The insurance company officer had detailed discussions with him and the following values of the assets were agreed for fire and burglary insurance. (₹ In lakh) Value of flat to be covered 75 Flat's contents Jewellery 10 Paintings and art features 20 Furniture & Fittings 5 Other miscellaneous assets 10 TOTAL 120 The insurer quoted premium of ½% on the premises, 2% on jewellery, 5% on art features and paintings and 1% on other items. Sanjay felt that the premium rates were too high. He also thought that the likelihood of a fire accident at his flat was very minimal. However he wanted to have a cover and decided to take an insurance cover for the following values : (₹ In lakh) Value of flat to be covered 50 Flat's contents Jewellery 5 Paintings and art features 15 Furniture & Fittings 1 Other miscellaneous assets 4 TOTAL 75 The premium was paid to the insurance company based on the above values. The insurance company accepted the proposal and a policy was issued accordingly. A fire accident took place during the currency of the policy and the flat was damaged. The fire fighting force was able to control the fire and retrieve some of the assets. Sanjay lodged a claim of ₹ 75 lakh with the insurance company. The insurer appointed a qualified surveyor to inspect the damages and submit a report. The surveyor in his report mentioned that the flat did not suffer any material and substantial damage and with an expenditure of ₹ 20 lakh, it could be restored to its original position. As regards other assets insured, he reported that jewellery was kept in safety boxes and was intact and did not suffer any damage at all. Paintings and artefacts had suffered extensive damages along with furniture and other miscellaneous assets. The surveyor raised question on admissibility of claim under the policy by stating that the fire was caused due to overhanging electrical wires which was due to the negligence of the insured. Sanjay got the copy of the survey report and represented to the insurance company that there was no negligence on his part and the electrical wire was left hanging by the builder. He also stated that the paintings and artefacts were total loss and they cannot be repaired or set right. The other items affected by the fire and salvaged by the fire fighters were sold for ₹ 40,000 with the concurrence of the insurance company. Sanjay wanted the insurance company to pay him the full insured value. On the basis of the above facts provide your answers/observations to the following issues: (a) Who is a surveyor and in what circumstances does an insurer appoint him ? Is the surveyor report binding on the insurer and the insured ?

Answer & Explanation:

A surveyor or a loss assessor is relevant for general insurance business, where assessment of the loss of the subject matter insured is very important for deciding the claim amount. The job of the Surveyor or Loss assessor is to arrive at the exact amount of loss incurred and his role is critical to general insurer. Every person who is a student member of the Institute of Surveyors and Loss Assessors intending to act as a Surveyor or Loss Assessors is required to be licensed by IRDA to start functioning as surveyor for general insurance. The IRDA license for Surveyor is valid for a period of 5 years and has to be renewed after every 5 years. A surveyor is appointed in cases of claims of loss exceeding ₹ 20000. A surveyor examines the claim, takes note of the claims of the insured and reports to the insurance company. Prior to submitting his report to the insurer, the surveyor discusses the claim with the insured and a copy of the report is also sent to the insured. The surveyor is a technical expert well versed in the area of the claim. He also discusses in his report the contents of the policy, whether any policy restrictions are attracted, the concept of negligence if any and suggests what according to him will be a reasonable amount of claim to be paid. Such a report is not final and based on the report the insurer will negotiate with the insured and settle the claim. A surveyor shall submit his report within 30 days of his appointment. In exceptional case, the surveyor may seek extension of time up to six months from the insurer, under intimation to the insured. Generally the surveyor will cite some rules etc. and would suggest that the claim is mala fide and amount not payable. However these are only observations and don't have any legal authority. A survey report is a help in settling the claim and is not legally binding on the insurer and the insured. The National Consumer Commission held that the surveyor's assessment need not be the final word while settling a claim.

Topics: General Insurance

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic