Insurer Told To Pay Rs 11.29 Crore After Delayed Fire Claim Settlement

A consumer commission in Chennai has directed an insurance company to pay Rs 11.29 crore to a factory owner whose fire claim remained stuck for years, according to a recent report by The Hindu. The panel concluded that the insurer’s delay amounted to failure of service and ordered interest to be added to the final amount.

The dispute arose from a blaze at an industrial unit on the outskirts of the city. Materials and finished goods were damaged, production stopped, and the business turned to its fire policy for relief. Paperwork was filed, a surveyor inspected the site, and then nothing. Months passed with no clarity on payout or timelines. With working capital tied up and creditors waiting, the policyholder approached the consumer forum.

A Rebuke From The Bench

Hearings stretched across several sessions. At one point, the bench asked the insurer why the claim had not been processed despite surveys and documentation being complete. The explanations offered, additional checks, internal approvals, and transfer of files did not persuade the commission. Delay, the panel observed, undermines the purpose of risk cover. Fire insurance is purchased so a business can get back on its feet after a catastrophe, not push it into a funding crisis while the insurer deliberates.

The order directed payment of the insured amount with interest calculated at six per cent from the point at which the payout should reasonably have been made. The panel also awarded compensation for financial strain and the time spent litigating a claim that, in its view, ought to have been settled long before.

A Message For The Industry

Though commercial clients are often seen as savvy negotiators with access to legal recourse, the ruling signals that they, too, can rely on consumer protection when insurers stall. For industrial policyholders, time is often the sharper edge of the loss: machines remain idle, orders are cancelled, and lenders ask questions. Insurance is meant to smooth that shock; delay sharpens it.

For insurers, the case is a reminder that large-value claims are not purely technical exercises. Fire and engineering covers involve surveyors, adjusters, and back-and-forth on valuations, but those processes must move. Silence and vague assurances are no longer taken lightly by regulators or adjudicating bodies.

Whether the company chooses to appeal is a separate matter. What stands out is the commission’s insistence that the utility of insurance lies not in the policy document, but in the promptness of settlement when disaster hits.