Page 54 - Insurance Times June 2024

Insurance Caselaws

Supreme Court: If Ship Is Sent To Sea in certificate, the Classification Society must be notified of any
inadequacies or deficiencies in advance of the certificate's
An Unworthy State, Insurance Company issuance. This is significant since the insurance coverage is
Is Not liable For Any Losses Caused By predicated on the understanding that the Classification
Unseaworthiness. Society carefully considered every factor before granting
the certificate.The NCDRC denied the appellant, who
Case title: Hind Offshore Pvt Ltd v. IFFCO lost the vessel and his cargo in an accident, a maritime
insurance claim of 16 crores. The bench, which included
General Insurance Co. Ltd. Justices AS Bopanna and MM Sudresh, was considering this

Summary appeal.
The Supreme Court has ruled that marine insurance policies In this instance, the appellant concealed prior damage to
cannot be held responsible for losses resulting from ships the primary port engine from the class certification
being sent into the ocean while not seaworthy. The Court authorities.In this instance, the respondent (insurer) had
emphasized that an insurer's awareness of a guarantee charged the appellant 8 crores for a maritime hull insurance
breach does not automatically translate into a waiver. To coverage for his yacht between 2005 and 2006.
obtain insurance coverage for a vessel based on a The primary port engine was damaged in 2006. After
classification certificate, the Classification Society must be conducting an inspection, the surveyors concluded that it
notified of any inadequacies or deficiencies in advance of the could not be repaired. However, the engine was only
certificate's issuance. The NCDRC denied an appellant's temporarily fixed because the replacement duration was six
maritime insurance claim of 16 crores due to the appellant months and there was an urgent commercial demand. One
concealing prior damage to the primary port engine from crore rupees was given by the responder to replace the
the class certification authorities. The court concluded that engine crankshaft.
if a ship is sent to sea in an unfit state and the insured party
knows about it, the insurer will not be held responsible for At this point, the respondent gave the appellant a new policy
any losses. The court also highlighted the importance of for 2006-07. After surveying the ship, the American Bureau
trust and transparency in policy issuance. The appellant may of Shipping issued a class certificate on October 19, 2006.
have notified the respondent that the advance receipt was Sadly, the ship was hit by a tugboat on December 3, 2006,
and it sank. The respondent hired a surveyor to estimate
not being used, but an open and honest stance would have
given the appellant a rightful stage to make their argument. the loss, and the appellant demanded 8 crores from them.
According to the surveyor, the appellant failed to notify ABS
About the case about the prior damage to the main port engine. It also
According to a recent ruling by the Supreme Court, the stated that the class certificate would be immediately
insurer under a marine insurance policy is not responsible suspended if any damage was sustained by the vessel and it
for any losses resulting from a ship that is sent into the ocean was not reported to the class.
while not seaworthy. It further noted that unless expressly As for the prior surveyors, their final report from the first
indicated, an insurer's awareness of a guarantee breach disaster was released in 2007 and stated that since there was
does not automatically translate into a waiver. little chance of the vessel being recovered, there was no need
The Court decided that in order for an insured party to get for permanent repairs and that the 1 crore rupees that had
insurance coverage for a vessel based on a classification been granted earlier should be reimbursed.

The Insurance Times June 2024 49