INSURERS CAN’T REJECT SURVEYOR REPORT WITHOUT VALID REASON: SUPREME COURT

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THE Supreme Court has said to assess the damage claim, the insurance companies cannot appoint surveyor after surveyor to get a tailor-made report. If the report of the damage surveyor is not acceptable, the insurance companies have to give valid reason(s) for rejecting such a report, said apex court.

   “The insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the concerned officer of the insurance company. If for any reason, the report of the surveyor is not acceptable, the insurer has to give valid reason for not accepting the report”, said a bench comprising Justice Markandey Katju and Justice HL Dattu.

   The court said, scheme of section 64-UM of the Insurance Act, 1938 particularly its sub-sections (2), (3) and (4) would show that the insurer cannot appoint a second surveyor just as a routine matter. If for any valid reason the report of the surveyor is not acceptable to the insure, it must specify cogent reasons, without which it is not free to appoint second surveyor or surveyors till it gets a report which would satisfy its interest. Alternatively, it can be stated that there must be sufficient ground to disagree with the findings of surveyor / surveyors. There is no prohibition in the Insurance Act for appointment of second surveyor by the insurance company, but while doing so, they has to give satisfactory reasons for not accepting the report of the first surveyor and the need to appoint second surveyor, the court said.

   Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured. Surveyor/surveyors are appointed by the insurance company under the provisions of Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them, the court pointed out.

   The Oriental Insurance Company to assess the damage of a claimant had appointed a licensed surveyor for preliminary investigation. After receipt of the preliminary report, it had appointed Joint Surveyors in terms of Section 64 UM(2) of the Insurance Act. The insurer was of the view that the report was perfunctory. It then appointed yet another surveyor who in turn had appointed the former DIG (Fire) CISF and Fire Adviser to the government of India to investigate and submit a report,who in turn after investigation and survey submitted his report confirming the quantification made by the Joint Surveyor.

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