Delhi Consumer Commission Orders Insurer to Pay Rs 25.6 Lakh Over Power Theft Claim Rejection
Delhi Consumer Commission has ruled against the insurer over the power theft claim rejection, ordering Rs 25.6 lakh in compensation.
Delhi Consumer Commission has directed the insurer to pay Rs 25.6 lakh after rejecting a power theft claim.
Delhi Consumer Commission: The Delhi State Consumer Commission has ordered National Insurance Company Ltd to pay Rs 25.61 lakh to a power transmission company after ruling that a partial delay in intimating a theft claim did not justify the insurer’s outright rejection of the claim. The commission observed that the theft, which involved material stolen across a 215-km transmission project, could not reasonably have been assessed or reported all at once given the scale of the site.
The order was passed by commission president Justice Sangita Dhingra Sehgal along with member Bimla Kumari, who heard the complaint filed by the transmission company against the insurer’s denial of its claim.
Delhi Consumer Commission: The Policy and the Alleged Theft
The case centred on an All Risk Insurance Policy issued on March 31, 2016, covering a 400 KV double-circuit power transmission project spanning 215 km. The sum insured under the policy stood at Rs 580 crore, against a premium payment of Rs 1.31 crore.
The transmission company detected theft of project material, including conductor wire, on March 25, 2017. It lodged a police complaint, leading to an FIR on March 30, and separately notified the insurer of the loss on April 1, 2017, raising a claim of Rs 54.40 lakh.
According to the complaint, the insurer did not settle the claim for years and ultimately rejected it through a letter dated October 5, 2020, citing delayed intimation as a violation of policy conditions. The transmission company then moved the consumer commission, seeking the claim amount along with compensation and litigation costs.
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In its defence, the insurer contended that the transmission company did not qualify as a “consumer” under the Consumer Protection Act, 2019, and also questioned the commission’s territorial jurisdiction. It maintained that the delay in reporting the theft amounted to a breach of policy terms that justified repudiation.
Delhi Consumer Commission: Why the Commission Split the Claim Into Two Segments
The commission’s assessment turned on a specific policy clause requiring the insured to immediately notify the insurer of any event likely to result in a claim, alongside obligations to limit further loss, preserve damaged material for inspection, share requested documentation, and inform police in theft-related cases. Separately, the policy barred liability for losses not reported to the insurer within 14 days of detection.
Applying this clause, the commission examined the theft loss in two parts, corresponding to two stretches of the project.
For stretch B, where the estimated loss was around Rs 42 lakh, the commission found that intimation reached the insurer only on April 19, 2017 — 25 days after the theft was detected. This exceeded the 14-day window prescribed under the policy, and the commission upheld the insurer’s rejection of this portion of the claim as a valid application of the policy condition.
For stretch A, involving an estimated loss of roughly Rs 38 lakh, the company had intimated the insurer within the 14-day limit. The commission noted only a five-day gap in informing police about this portion of the loss, and concluded that such a short delay, without more, did not amount to sufficient grounds to reject the claim. It held that treating this delay as fatal to the claim reflected an unsubstantiated stance by the insurer and constituted unfair trade practice and deficiency in service.
Delhi Consumer Commission: Order and Consumer Takeaways
Based on this reasoning, the commission directed National Insurance Company to pay Rs 25.61 lakh to the transmission company, corresponding to the stretch A portion of the loss upheld in the company’s favour.
The ruling underscores that policyholders are expected to report theft or loss to both insurers and police within stipulated timelines, and that non-compliance can weaken a claim, as seen with the stretch B portion in this case. At the same time, the order signals that a short or explainable delay does not automatically entitle an insurer to reject an otherwise genuine claim, particularly where the insurer fails to demonstrate concrete prejudice arising from that delay.
Consumers with insurance-related grievances can approach the consumer helpline in their respective states — in Delhi, this is 1800-11-4000 — or contact the National Consumer Helpline at 1915 for assistance.
