Maharashtra consumer commission orders United India to pay Rs 87.33 lakh fire claim

The Maharashtra State Consumer Disputes Redressal Commission on 21 October 2026 ordered United India General Insurance Co. Ltd. to pay Rs 87,33,324 to a Solapur textile unit whose fire insurance claim it had rejected. The commission held that the rejection was arbitrary and unjustified and amounted to deficiency in service and an unfair trade practice.

What Happened

According to the order, the unit makes towels and napkins in the MIDC area of Solapur. It held three policies from the insurer covering the factory building, plant and machinery, stock and raw material, with a total sum insured of Rs 91.5 lakh. On 21 July 2017, a fire caused by an electrical short circuit broke out in the factory. The unit informed the police, the fire department, the electrical inspector and the insurer, and claimed a loss of Rs 87,33,324.

The insurer rejected the claim by a letter dated 16 July 2018. It cited unauthorised construction on the floors where the fire occurred, an unauthorised electricity connection and the absence of fire extinguishers, which it said breached a general condition of the policy.

The commission noted that the policies were issued after the insurer inspected and photographed the premises. Having accepted the premium, it held, the insurer could not later rely on structural deviations unless it proved they changed the risk and were hidden with a link to the fire. It found that minor safety lapses, unless clearly made a condition of the cover, cannot be the sole basis to reject a claim for an accidental fire, and that the insurer had not shown any deliberate concealment that caused the fire.

The commission ordered the insurer to pay the claimed amount with interest at 9% a year from 16 July 2018 until payment, plus Rs 1 lakh as compensation for mental agony and Rs 50,000 as litigation costs.

What It Means

For small businesses that insure factories and stock, the order says an insurer must show a real connection between an alleged breach and the loss before refusing a fire claim. The commission's order may be appealed. Business owners with an insurance dispute can approach the National Consumer Helpline on 1915 or file a complaint through e-Daakhil.

Source: Consumer commission order