Page 28 - The Insurance Times May 2025

signifies a violent storm; flood is overflowing or irruption of be applied to the instant case as the coal had merely been
a great body of water and not merely a seepage, trickling washed off due to heavy rains. The argument was that the
or dripping from some natural source. All these three perils rainfall was the cause of the loss and not the flood, as there
have some element of violence, suddenness or largeness was no water body near the insured's stock. The insured's
about them. Flood, here, has been defined in the context counsel argued that the surveyor had relied on the rainfall
of other words with similar connotations. data of Nimbahera (the place of occurrence of the loss) for
29.08.2003 and 30.08.2003 from the Meteorological
In another case involving Oriental Insurance Company Department of the Government of India to conclude that
Limited versus M/s. J.K. Cement Works (2020) - the there were adequate rains in the area to cause floods/
Respondent, J.K. Cement Works, purchased a Standard Fire inundation.
and Special Perils insurance policy from the Appellant( The
Oriental Insurance Co Ltd) for the coal stock between The Hon'ble court delved deep into the definition of flood
20.11.2002 and 19.11.2003. The policy covered damage and devised the observation mentioned below.
caused by "Storm, Cyclone, Typhoon, Tempest, Hurricane,
Tornado, Flood and Inundation". In an ordinary context, floods may be described as an
overflow of water over land. There are three categories of
As a result of torrential rains on 29.08.2003 and 30.08.2003, floods: coastal floods, fluvial floods (river floods), and pluvial
a certain amount of coal was washed off, and the stock of floods (surface floods).
coal suffered damage. On 01.09.2003, the insured informed 1. Coastal floods take place when sea or ocean water flows
the insurer of the damage. The appointed surveyor into nearby areas. High tides or storm surges cause
submitted its report on 29.03.2004, assessing the loss them, such as strong winds from a hurricane or other
caused to the insured (Respondent) at Rs.58,89,400/ and storms forcing the water onshore.
maintained that the liability was admissible as the loss was 2. Fluvial or river flood occurs when the water level
caused by flood as per the policy issued.
exceeds the holding capacity of a river, stream, or lake.
The resulting overflow of the leftover water submerges
The insurance company, on 14.12.2004, repudiated the the nearby banks and neighbouring land. Excessive
claim on the score that the loss caused to it did not fall
rainfall or unusually high melting of snow causes this
within the scope of the policy, as the loss occurred due to flood.
heavy and extraordinary rain and not 'flood' or 'inundation'.
3. Pluvial or surface floods are caused by excessive rainfall,
The insured filed a consumer complaint before the NCDRC
so water accumulates in an area. Overflowing water
seeking compensation of Rs.1.32 crores. Vide the impugned
bodies have no bearing on this type of flood. Pluvial
order dated 18.11.2008, the NCDRC allowed the insured
floods include flash floods due to intense but brief
Rs.59,89,400/- (based on the survey report ) and directed
torrential rain spells. A pluvial flood is widespread in hilly
the insurer to pay the said amount along with 9% interest.
regions - as the run-off water from hilly regions flows
and accumulates in the low-lying area. Because of
The insurance company contested the above judgment and
concrete streets and thick construction, rainwater
appealed to the highest court. The learned counsel
cannot seep into the ground in dense urban localities.
appearing for the insurance company contended that the
Steady rainfall over a few days or torrential rains for a
terms 'flood' and 'inundation' refer to two significantly
short period may clog the drainage system's capacity,
different phenomena that cannot be equated with each
splashing water on the streets and nearby structures
other and argued that the term' flood' refers to overflowing
and resulting in immense economic damage.
of water bodies such as rivers, ponds, lakes etc.
So far as the term 'inundation' is concerned, it can be used
In the absence of a water body near the factory that had
to refer to the act of overflowing water over normally dry
overflown into the coal yard, the loss cannot be said to have
land and to the state of being inundated. Inundation can
been caused by a 'flood'. As per the term 'inundation', the
learned counsel of the insurance company argued that the also be intentional for agricultural and river-management
purposes. Inundation refers to the accumulation of water
same refers to 'accumulation of water' and could thus not
in which objects or land may be submerged. In simpler
26 May 2025 The Insurance Times