Gold heist: Consumer forum orders insurer to pay jewellery store Rs 80 lakh in Karnataka

The state consumer disputes redressal commission has ordered an insurance company to pay over Rs 80.2 lakh to a jewellery company to cover for losses incurred during a robbery in 2011.

The Chemmanur Jewellers store at Dasarahalli was insured with The New India Assurance Co Ltd, a public-sector general insurance company for a period of a year, from March 10, 2011, until March 9 next year. The insurance policy was valued at Rs 9 crore and covered all the gold and silver articles stored inside.

Before the end of the insurance period, a robbery on the night of December 7, 2011, caused the jewellery company a loss of an estimated Rs 79.86 lakh. The insurance company, however, agreed to compensate only Rs 48.86 lakh, after a surveyor’s report on December 31, 2011, estimated the total loss at Rs 48,86,947 and noted that the jeweller had underinsured its assets by Rs 29,85,068.

The surveyor, however, provided an addendum report in February 2013, where it estimated the net loss at Rs 78.72 lakh.

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The jewellery company argued that the insurers ignored the addendum report and decided upon Rs 48.86 lakh as the total loss amount. Of this, the insurer agreed to release only Rs 36.65 lakh initially and the remaining 25% only after the final investigation report was produced.

Calling this an unfair trade practice and a deficiency of service, the jewellery store argued that they were legally entitled to a claim of Rs 80 lakh and sought an order in that regard.

The bench noted that the insurance company’s contention of underinsurance is "unacceptable" as it was not substantiated by other evidence and was brushed aside by the addendum report, therefore concluding that the insurer had rendered a deficiency of service and was to pay the jewellery company Rs 78,72,015.

As the insurer had failed to settle in nearly 10 years, the court decided that it was also to compensate for the escalated price of gold from December 16, 2011, till July 13, 2023, when the case was settled. Additionally, the insurer was to pay Rs 1 lakh for mental agony and inconvenience and Rs 50,000 as litigation costs, all within 45 days after settlement.