Why you should read the fine print of your insurance policy

State Consumer Disputes Redressal Commission sets aside compensation to businessman who suffered losses during July 26, 2005, saying his policy did not cover flood damage since July 2004

This will serve as a warning bell to those who opt for insurance policies without paying attention to details.
    A Kalyan businessman – awarded Rs 2.25 lakh compensation from an insurance company after he suffered losses in the July 26, 2005, floods by the Thane consumer forum – will now no longer get that amount. The State Consumer Disputes Redressal Commission set aside the compensation, observing that floods were not covered by the policy, which was signed way before 26/7.
FLOOD DAMAGE
Yusuf Hussain Khan, who ran his plastic goods factory at Kalyan, availed the cash credit limit facility (a working capital loan) from the Kokan Mercantile Co-operative Bank. To secure their cash credit facility, the bank took an insurance cover from the Oriental Insurance Company. The bank would debit the insurance premium from Khan's cash credit account.
    From 2004, the insurance cover did not cover flood damages. However, during the July 2005 floods, Khan suffered damages worth Rs 2.5 lakh and requested the bank to give him a flood victim's benefit, which was turned down. Khan's plea to the insurance company was also rejected on the grounds that risk due to flood was not covered under the policy.
    Khan filed a complaint with the Thane consumer forum, which asked the insurance company to compensate him with Rs 2 lakh towards goods damages, and Rs 25,000 towards mental trauma. The insurance company challenged the order before the Commission, which set aside the Thane forum's order last week.
    The commission held, "The forum on its own has drawn a conclusion that… the policy documents had been tampered with [to remove the flood cover from the initial policy]." The commission held that the Thane forum, "committed a serious error to infer accordingly."
    The commission also observed that neither Khan nor the bank, had at any point, objected to the exclusion of the flood cover in the policy in 2004. The insurance company's rejection of the claim "is proper and cannot be faulted with," the commission ruled.

The compensation was denied to Yusuf Khan as the policy did not cover damage due to floods

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