Heavy rain damage and flood insurance coverage - National Commission J. Rajendra (August 16, 2024)

Q: Why did the insurer repudiate the insured’s claim after heavy rains?

The insurer argued that the policy did not cover damage resulting from heavy rains, despite the claim being linked to flood-related loss terms.

Q: What did the Maharashtra State Consumer Disputes Redressal Commission decide?

It ruled in favor of the insured, directing the insurer to pay the assessed amount with interest from the loss date.

Q: How did the National Commission interpret “flood” and “inundation” in the policy?

It held that coverage for “flood” and “inundation” would include losses caused by heavy rains, including pluvial flooding and inundation effects.

Sep 2, 2026

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Dispute over an insurer’s repudiation of a claim for water damage following heavy rains in Mumbai. The insured’s stock, covered under a fire and special perils policy, was rejected on grounds that heavy rain losses were not included. The Maharashtra State Commission ordered payment with interest, and the National Commission upheld that view, finding that the policy’s use of “flood” and “inundation” covers heavy-rain caused pluvial and inundation flooding. The insurer’s appeal was dismissed.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages3

Reading Time8 min

AccessFree to download

Flood and inundation policy coverage

Background: heavy rains and loss

Insurer’s repudiation and appeal

Consumer commission findings

National Commission decision (J. Rajendra)

| To
The Corporate Relations Department BSE Limited
Phiroze Jeejeebhoy Towers, Dalal Street,
Mumbai – 400 001
Code: 540222 | To
The Listing Department
National Stock Exchange of India Ltd.
Exchange Plaza,
Bandra Kurla Complex, Bandra (E) Mumbai – 400 051
Code: LAURUSLABS | | --- | --- | | Heavy rain damage falls under flood cover | | | --- | --- | | | granted a one-month period for compliance, stipulating that any delay would result inan increased interest rate of 12 percent. Additionally, ~1 lakh was awarded for costs.
The insurer challenged the order by filing an appeal. It argued that the State Commission’s order was incorrect as it had overlooked the terms of the policy which provided coverage for loss due to floods, but did not include perils related to heavy rains or defective construction.
The National Commission observed that the law was well settled: the terms of | | Geekay International, a business a policy, if ambiguous, would be
specialising in cloth and garments, had construed in favour of the insured. It secureda Standard Fire and Special Perils further observed the insurer had not been Policy from National Insurance Co. This able to cite any specific exclusion clause policy provided coverage for stock stored under which the claim had been rejected. at its business premises, which were The National Commission referred to
leased under a leave and licence both general dictionary definitionsand
[agreement. legal](agreement. legal)interpretations from Black’sLaw
During the policy Dictionary and Stroud’s
period of 2011-2012, heavy Judicial Dictionary where
rains struck Mumbai on The National “flood”was described asan
August 18, 2011. The Commission overflow or large movement of
intense downpour led toa concluded that water beyond its natural pbpcoges,llainhoithgthe e policyverage f’sor flood it.hhofmasi:ssionoastal insured’s business. Asa and inundation floods, fluvial (river) floods, result, the stock suffered would include and pluvial (surface) floods.
significant water damage. losses caused by Pluvial floods, it noted, could The insured promptly heavy rains result from flash floods caused
informed the insurer, by intense, short-term rainfall,
| | | which then appointed a
surveyor to assess the damage and determine the value of the loss. However, the claim was later repudiated on the grounds that the policy did not cover damage resulting from heavy rains.
Aggrieved by the insurer’s refusal to honour the claim, the insured filed a complaint with the Maharashtra State Consumer Disputes Redressal Commission. The complaint alleged a deficiency in service and sought a declaration requiring the insurer to settle the claim, along with 18 percent interest and compensation of~25 lakh for mental harassment. The insurer contested the complaint, reiterating its decision and justifying the repudiation based on the terms and conditions of the policy.
The State Commission, however, ruled in favour of the insured, directing the insurer to pay~46,48,565 along with 9 percent interest from July 18, 2011, the date the loss occurred. The Commission | with water flowing from surrounding hilly areas into low-lying regions, or rainwater accumulating in urban areas where concrete streets and dense construction prevent seepage.
The Commission further observed that steady rainfall over a few days or torrential rains fora short period could overwhelm drainage systems, leading to water accumulation on the streets and nearby structures, causing immense economic damage.
Based on this reasoning, the National Commission, ina judgement delivered by J. Rajendra on August 16, 2024, upheld the State Commission’s decision. It concluded that the policy’s coverage for“flood”and“inundation”would include losses caused by heavy rains. Consequently, the insurer’s appeal was dismissed, and the order to settle the claim was upheld.
The writerisa consumer activist | | O<Ûäè‘·

FAQs

Why did the insurer repudiate the insured’s claim after heavy rains?

The insurer argued that the policy did not cover damage resulting from heavy rains, despite the claim being linked to flood-related loss terms.

What did the Maharashtra State Consumer Disputes Redressal Commission decide?

It ruled in favor of the insured, directing the insurer to pay the assessed amount with interest from the loss date.

How did the National Commission interpret “flood” and “inundation” in the policy?

It held that coverage for “flood” and “inundation” would include losses caused by heavy rains, including pluvial flooding and inundation effects.

Sep 2, 2026

Upload by Melati