I.C. Sharma v. The Oriental Insurance Co. Ltd.
Background
The appellant, a householder insurance policyholder, suffered a burglary at his home while abroad in January 2008. His claim went through the District and State Consumer Forums and then the National Consumer Disputes Redressal Commission, which awarded him only partial amounts for jewellery, clothing, electrical appliances and other stolen items, applying a principle of "under-insurance" (proportionate reduction) across several categories and rejecting some claims for lack of purchase invoices. Dissatisfied, he appealed to the Supreme Court in person.
Decision Breakdown
The Court explained the legal principle of under-insurance in detail: it applies only when some, not all, of the items insured under one category are lost (triggering proportionate reduction), but not when the entire insured category is stolen, in which case the full insured sum must be paid. Applying this, it upheld the National Commission's reduced award for clothing (since not all clothing was stolen) and for silver cutlery (wrongly claimed under the jewellery head), but held that the claims for electrical/mechanical appliances and miscellaneous items (watches) could not be rejected merely for lack of invoices, since the appellant's sworn affidavit and police complaint corroborated the loss, and insurers that stopped requiring itemised lists cannot later penalise policyholders for not producing bills. It accordingly enhanced the award on those heads and added compensation and 12% interest from January 2009.
Lesson Learnt
Under an "under-insurance" (consolidated-sum) household policy, a claimant need not produce purchase invoices for every lost item if sworn testimony and a police report credibly establish the loss, and the under-insurance/proportionate-reduction rule applies only when part, not all, of an insured category is lost.