Page 49 - The Insurance Times September 2025
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Insurers must maintain transparent and consistent prac- New India Assurance argued that:
tices in policy renewals. Transit had ended upon storage, and the cargo was no
Minor, non-critical health disclosures cannot be a valid longer under "movement".
reason for claim denial unless shown to be maliciously The packaging lacked adequate waterproofing.
hidden.
Court Observations
Case Study : Marine Cargo Insurance The Bombay High Court took a detailed view of the policy
wording and industry practices:
Marine Cargo Loss Hindustan Unilever Limited Transit Continuity Clause: The Court ruled that tem-
(HUL) vs New India Assurance (Bombay High porary storage at a port warehouse, due to procedural
Court, 2009) delay or transit scheduling, does not interrupt transit.
Packaging Standards: The packaging was found to be
Background in line with industry norms. The Court held that insur-
Hindustan Unilever Limited (HUL), a leading FMCG com- ers must clearly define what constitutes improper pack-
pany, suffered a significant loss to its cargo due to water aging.
damage at a port warehouse during monsoon. The cargo
Policy Interpretation in Favour of Insured: Ambigu-
was insured under an open marine cargo insurance policy
ities in policy terms must be interpreted in favour of the
issued by New India Assurance.
insured as per the principle of contra proferentem.
After the incident, HUL filed a claim for damages. However, Commercial Reality: Recognized that large-scale cargo
the insurer repudiated the claim citing: movement often involves pauses due to customs or ship-
Improper Packaging: The insurer alleged that the pack- ping logistics.
aging was not water-resistant and violated policy con-
ditions. Judgment
Transit Discontinuity: The goods were temporarily The Court ruled in favour of HUL. It directed New India
stored at the port warehouse; the insurer argued this Assurance to compensate for the cargo loss with interest
interrupted the continuity of transit. and observed that the insurers interpretation of the policy
exclusions was unfair and against standard commercial prac-
Negligence in Storage: The insurer suggested that the
tice.
temporary storage exposed the cargo to avoidable risk.
Key Takeaways
Core Legal Arguments
Marine insurance policies must account for real-world
HUL contended that: logistics and not penalize insureds for routine storage.
The goods were in transit and had not yet reached the
Transit continuity needs clearer policy definitions to pre-
final destination.
vent similar disputes.
Temporary storage due to customs and transport sched-
Ambiguous clauses in insurance contracts must be con-
uling is standard practice and should not nullify cover-
strued in favour of the policyholder.
age.
Reinforces the importance of documenting cargo con-
The damage occurred due to an external peril (mon-
dition and warehouse protocols.
soon flooding), not poor packaging.
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The Insurance Times September 2025 45
