Page 57 - The Insurance Times August 2025

amount becomes payable, does not include a cause arising equally to both, it is the responsibility of the insurance com-
from a sunstroke." "Claim well in excess of any practical time pany to disclose all material facts within their knowledge.
frame." The court stated, "Considering the admitted posi- The complainant in this instance had obtained insurance
tion that the deceased's wife failed to file a claim applica- coverage from an insurance company in relation to the cul-
tion with the Chief Electoral Officer even seven and a half tivation of prawns on an area of 100 acres. An epidemic of
years after his death, this claim was, by any measure, be- the bacterial pathogen 'White Spot Disease' occurred ex-
yond a reasonable time frame." "It was the responsibility tensively along the eastern coast of Andhra Pradesh, result-
of Respondent No. 1 to file the claim within the allotted ing in the widespread demise of crustaceans.
time," the court further determined. Law Governing the On the basis that the complainant had violated the policy
Interpretation of Insurance Policy Clauses The court ren- conditions by failing to maintain records in a proper and ac-
dered the following decision, restating the legal principles curate manner, the insurance company rejected the
governing the interpretation of insurance policy clauses: a. appellant's entire claim after he invoked the policy. The NCDRC
Strict interpretation of the insurance policy's provisions is a determined his total loss to be 30,69,486.80 in resolving his
cliche that need not be repeated. b. Insurance contracts complaint. The complainant filed a petition with the Apex
are a unique category of agreements characterized by spe- Court in discontentment with this order. The court initially
cific qualities that are shared by all types of insurances, in- observed that uberrima fides, or good faith, is a prerequisite
cluding consideration of proximate cause, contribution, ut- for an insurance contract. "Good faith is the required condi-
termost good faith, insurable interest, and indemnity sub- tion; it is the contracting parties' duty to disclose all material
rogation. Furthermore, every category of insurance pos- facts within the scope of the agreement; and good faith pro-
sesses unique characteristics. hibits either party from withholding information that it knows.
Furthermore, the insured is obligated to disclose, and the
The Supreme Court ruled that insurance insurance company is likewise obligated to do so." Not only
at the commencement of the insurance contract, but also for
companies must operate in a sincere and the duration of its existence and beyond, this obligation and
equitable manner, preoccupied not only duty would be shared by both parties. The bench observed

with their own financial gain. that the insurance company disregarded the Death Certifi-
cate supplied by State Fisheries Department officials in
Case Title: Isnar Aqua Farms vs United India In- Visakhapatnam on May 1, 1995.
surance Co. Ltd. "The insurance company was unable to disregard and sweep
under the rug the matter simply because its contents were
Summary unfavorable." Furthermore, the insurance company may have
The Supreme Court ruled that insurance companies must placed such an emphasis on this in its standards because the
treat their insured in a sincere and equitable manner, as certification was granted by impartial and independent or-
good faith is a prerequisite for an insurance contract. The ganizations of considerable renown. Except in limited circum-
court observed that the insured is obligated to disclose all stances, insurance companies are not permitted to disregard
material facts within their knowledge, and both parties are or neglect to act upon a certificate or document they have
obligated to do so. The insurance company disregarded the requested from independent and impartial authorities sim-
death certificate provided by State Fisheries Department ply because they dislike it or believe it will be to their detri-
officials in Visakhapatnam on May 1, 1995, as it was ment. The court stated, "Once an insurance company has
granted by impartial and independent organizations. The agreed to indemnify an insured against potential loss in speci-
court stated that insurance companies are not allowed to fied circumstances, it is expected to fulfill its obligation in a
disregard or neglect to act upon a certificate or document sincere and equitable manner, rather than solely prioritizing
they have requested from independent and impartial au- its own financial gain." Upon granting the appeal, the court
thorities. The court ordered the insurance company to re- ordered the insurance company to reimburse the appellant
imburse the appellant Rs.45,18,263.20 within six weeks, plus Rs.45,18,263.20 within six weeks, plus basic interest of 10%
basic interest of 10%. from the date of the complaint to the date of realization.
About the case Uberrima fides, which translates to "good faith," is the stan-
Aside from caring for and catering to its own profits, the dard in insurance contracts. - Subject to just exceptions, an
Supreme Court stated that an insurance company is obli- insurance company may not disregard or fail to act upon a
gated to treat the insured in a sincere and equitable man- certificate or document that it has requested from indepen-
ner. The bench composed of Justices AS Bopanna and Sanjay dent and impartial authorities simply because it is opposed
Kumar noted that since the imperative of good faith applies to it or it would be to its detriment.

The Insurance Times August 2025 51