Page 28 - The Insurance Times April 2025

company would not pay for loss or damage caused by flood and was merely incidental to it'. The judge opined.
subsidence or landslip. Based on the above assumptions, the honourable judge
found it curious that the landslip was not put in the context
On the morning of August 4, 1998, David Cardoza awoke to of flooding.
the sound of heavy rainfall. The daylong uninterrupted
heavy rainfall started accumulating water at his newly Wherever the terms are ambiguous, the court adopts a
constructed property. Some work was unfinished in this more favourable construction to the insureds by applying the
building. Around 11:00 am, he heard a cracking sound 'contra proferentem' rules.
emanating from his newly built property, and to his great
dismay, he noticed a part of the swimming pool and some An established principle of insurance is when a peril insured
parts of the wall were torn off. The insurance company against precedes an excepted Clause -the resulting claims
denied the claim on the score that the event occurred arising out of the preceding peril despite the operation of
because of a landslip, a policy exclusion. the excepted peril are payable and should be considered the
proximate cause of the loss. Suppose there is a causal
Cardoza had successfully contended in the Court below that connection between the peril and the loss. In that case, the
the damage was caused by flood, a peril covered by the excluded peril is just merely a link in the chain of causation
Policy. The insurer referred the matter to the Court of to the extent it is a reasonable and probable consequence
Appeal as it argued that there was no flood and that the of the peril; the peril remains the cause of the loss within
damage was caused by a landslip, which was within the the meaning of the Policy.
exclusion clause and was not covered by the Policy. The
Court below agreed that Slippage was the final cause and Many health insurance claims in India are denied under the
the prior flooding was the proximate cause. Without the following standard exclusion: use, misuse or abuse of
flooding, there would have been no slippage, and without drugs/alcohol or use of intoxicating substances or such
this, no damage would have occurred. Slippage was the abuse or addiction.
direct result of flooding. The Honourable Judge found it
curious that the exclusion of landslips was not included in I have taken the example of policy wordings of some
the context of flooding. insurance companies for reference.
1. Convalescence, general debility, 'Run-down' condition
Landslip here was a contributory factor to the damage, and or rest cure, obesity treatment and its complications,
it was a policy exclusion. Insurance companies should use treatment relating to all psychiatric and psychosomatic
this exclusion in a precise manner without any ambiguity. disorders, infertility, sterility, Venereal disease,
The court tried to unravel the effect of the word landslip in intentional self-injury and Illness or Injury caused by
the context of the exception clause. 'There is no certainty the use of intoxicating drugs/alcohol.
on this issue. It could mean any landslip whatsoever is 2. Ailments requiring treatment due to the use or abuse
excluded, or it could mean the landslip must be the of any substance, drug or alcohol and treatment for
proximate cause of the damage for it to exclude the effect de-addiction.
of the flood, or it could mean a landslip which followed the
3. Medical expenses incurred as the result of alcohol and/
or drug abuse, addiction or Overdose
4. Insanity, the use of any alcohol/ drugs (except as
medically prescribed) or drug addiction
5. Treatment for alcoholism, drug or substance abuse or
any addictive condition and consequences thereof.
6. Any Illness/injury/accident due to abuse or the
consequences of the abuse of intoxicants or
hallucinogenic substances such as intoxicating drugs and
alcohol, including alcohol withdrawal, smoking cessation
programs and the treatment of nicotine addiction or any
other substance abuse treatment or services, or supplies,
impairment of Insured Person's intellectual faculties by

26 April 2025 The Insurance Times