Page 53 - Insurance Times October 2023

Insurance Caselaws

Landmark Cases in Insurance "Satwant Kaur Sandhu v. New India Assurance
Co. Ltd." (2014)
"New India Assurance Co. Ltd. v. Hilli
Multipurpose Cold Storage Pvt. Ltd." (2008) In the realm of general insurance in India, the case of
"Satwant Kaur Sandhu v. New India Assurance Co. Ltd."
In the insurance landscape of India, the case of "New India stands out as a pivotal case heard by the Supreme Court.
Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage Pvt. This case is particularly noteworthy for its impact on the
Ltd." marked a pivotal moment, especially in relation to the interpretation of motor insurance policies and the scope of
principles of insurance law and, more specifically, the duty coverage.
of disclosure. This landmark case, heard by the Supreme
Court of India in 2008, reemphasized the fundamental Background: The case involved a motor accident claim
made by Satwant Kaur Sandhu against New India Assurance
principles that govern the insurance industry.
Co. Ltd. The dispute centered around the interpretation of
Background: The case revolved around a claim made by Hilli the term "un-named passenger" in a motor insurance policy.
Multipurpose Cold Storage Pvt. Ltd. against New India
Assurance Co. Ltd., regarding a fire insurance policy. The Key Takeaways: The Supreme Court, in its judgment,
dispute centered on whether the insured had provided all clarified the interpretation of the term "un-named
material information at the time of purchasing the insurance passenger" in motor insurance policies. It held that un-
policy. named passengers are individuals who do not need to be
specifically named in the policy. Such policies automatically
Key Takeaways: The Supreme Court, in its judgment, cover all passengers, whether named or un-named, who are
underscored the principle that insurance is a contract of traveling in the insured vehicle.
utmost good faith. This means that both the insurer and the
insured must act in good faith and make full and accurate This judgment had a significant impact on motor insurance
policies in India. It broadened the scope of coverage,
disclosures of all material facts when entering into an
insurance contract. ensuring that passengers in a vehicle are covered by the
policy, whether their names are specifically listed or not. The
The Court clarified that the duty of utmost good faith Court's interpretation provided a more extensive and
requires complete honesty on the part of the insured when inclusive definition of coverage in motor insurance,
applying for an insurance policy. The insured must disclose benefiting policyholders and claimants.
all material information that could influence the decision of
The "Satwant Kaur Sandhu" case reinforced the importance
the insurer to accept or reject the risk.
of clear and unambiguous policy language in insurance
This case reaffirmed that the principle of utmost good faith contracts and contributed to a more consumer-friendly
is not one-sided. While the insured must make full and honest interpretation of motor insurance policies in India. It
disclosures, the insurer also has a duty to act fairly and in provided clarity regarding the extent of coverage and
good faith. The duty of disclosure is a shared responsibility. offered protection to passengers in insured vehicles.
The judgment in this case reinforced the need for These two landmark cases, "New India Assurance Co. Ltd.
transparency and fairness in insurance contracts and v. Hilli Multipurpose Cold Storage Pvt. Ltd." and "Satwant
emphasized the importance of accurate disclosure. It is a Kaur Sandhu v. New India Assurance Co. Ltd.," have had a
significant precedent that guides insurance practices in lasting impact on general insurance in India. They have
India, emphasizing that both parties, the insurer and the helped establish key principles and guidelines for insurance
insured, have obligations and responsibilities when entering contracts, claims, and the relationship between insurers and
into an insurance contract. policyholders.

50 October 2023 The Insurance Times