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

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: (d) In case Sanjay was not in a position to accept the insurer's settlement, what course of action is open to him to establish his claim ?