Page 48 - Insurance Times April 2020

LEGAL

Vehicle Insurance

Heavy rainfall falls under definition of versed their rulings and stated that “when an insured has

‘flood’ for insurance claim lodged the FIR immediately after the theft and when the
police after investigation have dodged a final report that
Damage to property because of heavy rainfall is included the vehicle was not traced and when the surveyors/investi-
in the definition of ‘flood’ and ‘inundation’ in the general gators appointed by the company have found the claim of
insurance policy, the Supreme Court has ruled, rejecting the the theft to be genuine, mere delay in intimating the in-
argument of Oriental Insurance that it was outside the surance company cannot be a ground to deny the claim on
scope of the policy. Loss because of heavy or extraordinary the insured.”
rain is not insured, the company argued. The case arose
when heavy rainfall led to the flooding of coal stock held by SC asks Oriental Insurance to pay Rs 3.5
J K Cement Works in Nimbahera. The claim was rejected
on the tricky argument over the meaning of flood and in- crore to National Bulk Handling Opera-
undation. tion

The Supreme Court has asked Oriental Insurance to pay Rs.
The insurer lost all the way, from district consumer forum 3.5 crore to National Bulk Handling Corporation, which
to the National Consumer Commission. Rejecting the argu- suffered by a fraud committed by its employees. The cor-
ments of the insurer, the court pointed out that there was poration had taken a fidelity guarantee insurance. The
no doubt that heavy rainfall had occurred in the area, caus- policy covers fraud, theft, and other offences committed
ing flood-like conditions that resulted in the coal kept on by the employees of a firm or institution.
the premises being washed off. Moreover, the surveyor’s
report also stated there was an accumulation of water The insurance under it is for honesty, against negligence or
because of the heavy rainfall and that had resulted in the for being faithful and loyal to its employers. The protection
coal being washed off. The court directed Oriental to pay afforded is different from normal insurance policies. In this
Rs. 58.89 lakh as damages, with 9 per cent interest. case, the corporation was a collateral management com-
pany, which undertook store commodities pledged by farm-
Delay in informing theft can’t be a ers, traders and manufacturers to get loans from banks. The
ground for claim rejection claim arose when 601barrels of menthe oil stored in a
Settling differences between two judges on the question of godown in Udhampur was found substituted with water.
consequences of delay in informing theft of a vehicle to the
insurance company, the Supreme Court has ruled that such The corporation claimed compensation under the fidelity
delay by itself would not be a ground to reject the claim. In policy alleging that its employees were involved in the fraud.
this case, Gurshinder Singh vs Shriram General Insurance, The corporation had also filed a police complaint. The in-
the person whose tractor was stolen had lodged a com- surer, however, argued that there was no evidence to prove
plaint with police but the vehicle could not be traced. He that the employees committed the offence as the seals
filed a claim before the insurer but it was rejected on the were intact. The court rejected the appeal and ruled that
ground of delay of 52 days. the policy covered employees’ fraud.
The consumer forum and the National Commission rejected Aircraft includes glider for insurance

the claim on the same ground. But the Supreme Court re- The Supreme Court has directed an insurance company to

48 The Insurance Times, April 2020