*Insurance Claims and Important Cases*
There are many theories doled out in guidebooks/PPTs dealing with insurance claims. However, in real life what matters are legal principles and actual decided cases that will decide the fate of an insurance claim. Here's a list of some important decisions on insurance claims. Ignoring relevant decisions that deal with insurance claims can often affect claim handling ability.
Case 1 : Marine Insurance
This case was related to a Marine Policy and it was a case of marine insurance. Insurance company had not paid the claim by raising various grounds. When the matter went into litigation, the principles applicable on marine insurance policy were discussed and it was held that insurance claim is payable. The arguments raised by insurance company were found meritless.
Case reference is UIIC v. Leisure Wear Exports Ltd [2016] GCtR 6513 (SC)
Case 2 : Fidelity Guarantee
In this case, the insurance claim was related to Fidelity Guarantee Policy. When the insurance claim was made by customer because of fire on 1 July 2013 and theft, the insurance Company NICL did not decided the claim for more than 3 years and later on repudiated the claim. It was held that an insurance company cannot plead beyond the points raised in its repudiation letter in respect of the claim made. Insurance company was directed to pay interest amount of more than Rs. 1.32 crores in addition to the principal amount of insurance claim.
Case reference is National Bulk Handling Corporation Pvt Ltd v. NICL [2025] GCtR 1836 (NCDRC).
Case 3 : Fire Insurance
In this case, standard fire and special perils policy was taken. It was held in this case that report of a surveyor must be given due importance and that there should be sufficient grounds for explaining a disagreement with an assessment made by a report of the surveyor. Yet at the same time, under Section 64-UM(2) of the Insurance Act 1938, it is not open to the insurer to merely appoint a succession of surveyors with a view to obtain a tailor-made report.
Case reference is New India Assurance Co. Ltd v. Buchiyyamma Rice Mill [2020] GCtR 1009 (SC).
Case 4 : Fire Insurance
This case was related to fire insurance and standard fire and special perils policy was obtained. When fire broke on 27 March 2013 the claimant made a claim ; but the insurance company for more than 6 months did not decided on the insurance claim and repudiated the claim after 6 months. Insurance company argued that the claim is frivolous ; it was argued that affected goods were outside the policy scope. The surveyor concluded that the NICL's liability with respect to the policy as ‘Nil’ for the said reason.
Allowing the payment of insurance claim and setting aside repudiation it was held that the action of the surveyor as well as the NICL in not considering damage occasioned in due compliance of the terms of the policy is untenable. It was held that burden is on the insurer to show that the case falls within the purview of exclusion clause. In case of ambiguity, benefit goes to the insured.
Ultimately, NICL was directed to pay interest amount of more than Rs. 1.73 crores in addition to the principal amount of insurance claim.
Case reference is Jindal Poly Films Pvt Ltd v. NICL [2025] GCtR 1837 (NCDRC).
Case 5 : Fire Insurance
In this case, fire insurance and a standard fire and special perils policy was involved. Consumer had purchased the policy from one of the public sector general insurance companies. Loss took place on 23 Feb 2010. Insurance company took more than 6 months to decide about the insurance claim and ultimately repudiated the insurance claim. When the matter went into litigation, India's highest Court viz. Hon'ble Supreme Court held that "Wherever such an exclusionary clause is contained in a policy, it would be for the insurer to show that the case falls within the purview thereof. In a case of ambiguity, it is trite, the contract of insurance shall be construed in favour of the insured." It was held that decision to repudiate insurance claim is not legally sustainable and was found to be illegal. It was directed that NICL will deposit Rs. 89 lacs and consumer is permitted to file application for withdrawing said amount during the pendency of the complaint.
Case reference is Narsingh Ispat Ltd v. OICL [2022] GCtR 895 (SC).
Case 6 : Health Insurance
In this case, the issue was whether the insurance company can be exonerated from paying interest amount in addition to principal claim amount if the health insurance claim is repudiated by raising the ground of "pre-existing disease" or the ground of non-expiry of 4 years after the customer had already paid the insurance premium amount ? It was held that insurance company would have to pay interest amount of more than Rs. 3 lacs in addition to principal claim amount. Therefore, claim repudiation of NICL was held unsustainable and NICL had to pay interest amount as well.
Case reference is R.P. Verma v. NICL [2024] GCtR 3480 (NCDRC).
Case 7 : Special Contingency
In this case, Special Contingency Insurance Policy was purchased from a public sector insurance Company viz NICL. It is the case of the complainant that during the subsistence of the policy, the machine got damaged in an accident which took place at Kochi on 19.07.2011 at about 10 p.m. However, claim was kept pending for more than 6 months. It was argued by customer that the complainant was entitled to the loss assessed by the surveyor, even though the complainant had not carried out the repairs. After noting that customer has already paid the due insurance premium amount to NICL, it was held that "The insurance companies in genuine and bona fide claims of the insured, should not adopt the attitude of avoiding payments on one pretext or the other". NICL was directed to interest amount of more than Rs. 12 lacs in addition to the remaining balance amount of insurance claim. Apart from the principal claim amount, insurance company was also directed to pay an additional amount of Rs. 1.5 lacs towards mental agony, litigation costs etc.
Case reference is Gypsum Structural India Pvt Ltd v. NICL [2025] GCtR 1268 (SCDRC, Delhi).
*Case 8 : Contractors All Risk Policy*
This was a case of “Contractors All Risk Insurance Policy”. On dated 16.06.2013 due to heavy rain and landslide, the work done by the complainant on the insured site got washed aside causing heavy losses amounting to more than Rs. 80 Lakhs to the complainant. However, the insurance claim was kept pending for more than 2 years. The case went into litigation and NICL was directed to pay the insurance claim. It was observed that the insurance policy specifies Contractors All Risks Insurance, but does not provide any explanation for why certain risks are excluded from coverage and why premium of such risks was not taken by the Insurer. It is also noteworthy to mention that Surveyor in its report dated 29.09.2015 in para No. 2.9 hinted towards a possibility of error on the part of the Insurer to exclude FSTI perils in civil projects located in hilly areas and found it unusual.
Case reference is *M/s D.S.M. (JV) v. NICL [2025] GCtR 1843 (SCDRC, Uttarakhand).*
*Case 9 : Fire Insurance*
In this case, the customer purchased two insurance policies from the insurance company, vide policy No.401800111810000010 and 401800111810000009 from 13.04.2018 to 12.04.2019 namely Standard Fire and Special Perils Covering Stock, Machine and Building. NICL was the insurance company which was the insurer. Unfortunately on 23.10.2018 at about 12:00 p.m., a massive fire broke out in the building premises. The machinery and equipment and other electrical installations were also damaged. In this case, the insurance claim was kept pending for more than 1 year. The matter went into litigation. It was observed that initially, the policy bearing No. 401800111810000009 was obtained for the sum insured of Rs.80,00,000/- but it was further raised to Rs.2,10,00,000/-, vide policy No.401800111810000010 by paying the additional premium of Rs.38,719/-, above the premium paid of Rs.7,990/-. It was held that "the issuance of the policy and its validity is also not disputed" and noting that surveyor did not filed its affidavit, the surveyor in his report has disallowed some items while assessing the loss without specifying any reason ; surveyor, in his report, has not furnished any reasoning or technical basis in rebuttal to the report submitted by the customer ; and noting that insurance company should have clearly informed the insured of certain facts prior to the issuance of the policy, it was held that NICL had to pay the insurance claim. It was held that "it is a matter of common practice that insurance companies, while collecting premium from the public at large, issue policies without adequately disclosing the full implications, limitations, or exclusions contained therein."
NICL was ultimately directed to pay a huge amount of interest plus compensation and litigation costs in addition to the principal amount of insurance claim.
Case reference is *NICL v. Chander Steel Industries [2025] GCtR 1844 (SCDRC, Punjab).*
*Case 10 [Motor Insurance]: Effect of Validity of DL on Insurance Claims*
In this case the issue was related damage to vehicle and compulsory PA Cover.
Sandeep was owner of vehicle. NICL issued policy. Coverage was from 28/9/14 to 27/9/15. Accident took place on 27/4/15. Sandeep and another person died. Vehicle wad damaged. Despite giving information to insurance company, the insurance claim was repudiated.
Insurance co. NICL said that Sandeep was not having valid DL ; NICL said that Nagaland Govt has issued information dt. 1 August 2014 and argued that issue of driving licence on booklet had been discontinued in the state after smart card had been introduced.
It was held that no recovery rights/exoneration is to be granted to insurance company.
It was held that the insurance claim repudiation is unjustified ; insurance company was directed to pay interest amount of more than Rs. 32,000/- plus another additional amount of Rs. 5000/- towards litigation expenses in addition to principal claim amount to the customer.
Case reference is *NICL v. Rekha [2017] GCtR 6516 (SCDRC, Haryana)*
*Case 11 [Motor Insurance] : Reasonable Steps to Safeguard the Vehicle and Effect on Insurance Claim*
The motorcycle owned by the complainant was insured with the Insurance Company for the period May 08th, 2014 to May 07th, 2015. On April 20th, 2014, the motorcycle was stolen. Insurance policy was issued by NICL.
Vehicle number was HR 11 F 3227.
Son of owner one day stopped the motorcycle and went for urination when the persons took away the motorcycle.
The complainant filed claim with the Insurance Company. The Insurance Company NICL repudiated the insurance claim on the grounds that the son of complainant did not take reasonable steps to safeguard the motorcycle from loss or damage and the Insurance Company was informed after about one month of the occurrence.
The law was explained where it was commented that the leaving of the key in the ignition of the car on all occasions cannot be termed as so serious breach so as to disentitle the insured from seeking claim under the insurance policy. If in the hurry to answer the call of nature the driver forgot to remove keys from the ignition switch he cannot be said to have committed wilful breach violation of the terms. So, it cannot be said that there was any willful breach in violation of Condition No. 5 of the insurance policy.
In this case, the motorcycle was stolen during the subsistence of the insurance policy. It was held that insurance claim was wrongly repudiated by NICL. NICL was directed to pay the insurance claim.
Case reference is *NICL v. Rahisu Din [2017] GCtR 6517 (SCDRC, Haryana).*
*Case 12 (Motor Insurance) : Car Stealing, Role of Key and Insurance Claim*
The facts of the case as per the complainant are that the respondent purchased an Indica Car Diesel DLS bearing registration no. PB10 BV 0701, Chasis no. 65816, engine no. 59931 in the year 2006 in the name of his proprietorship concern. 3. The respondent got his car insured for Rs.2,85,000/- from Insurance Co and paid Rs.7,477/- as premium to the petitioner no. 2, which is the Branch of Co, vide policy no. 360300/ 31/ 07/ 01/ 00000404 on 18.05.2007, which was insured upto 17.05.2008. As such, the customer has became a consumer of petitioner through the insurance policy. 4.
The car of the respondent was stolen by two unknown Sikh persons at gun point from the respondent on 21.06.2007 at Dugri, Phase III, Main Road, Ludhiana and an FIR bearing no. 132 dated 22.06.2007 has been registered against the aforesaid two unknown persons at PS Model Town Ludhiana on the information of the respondent. 5.
Despite having received insurance premium, one of the public sector general insurance company refused to pay the insurance claim. Insurance company said that that customer had violated the terms and conditions of the said insurance policy. Insurance company said that customer failed to take reasonable care to avoid the loss, rather there is negligence on his part.
Company also argued that customer violated the mandatory conditions of the policy.
Insurance company has also said that customer in order to cover up his gross negligence in leaving the vehicle like that the complainant concocted the story and thus did not approach the forum with clean hands.
Customer argued that the car had been stolen at gun point and he had been advised by the police not to mention it in the FIR.
When matter went into litigation, Insurance company not only had to pay the principal amount of insurance claim but in addition to that it had to pay additional amount towards litigation expenses and compensation.
It was held : "This condition in our considered view requires insured to take reasonable steps for protection of the insured vehicle from any loss or damage. The leaving of the key in the ignition of the car on all occasions cannot be termed as so serious breach so as to disentitle the insured from seeking claim under the insurance policy. Whether or not there is breach of condition will always depend upon the facts of the case. The car is said to have been stolen when the driver parked the vehicle at road side and went to ease himself, forgetting to remove the keys from ignition. This lapse on the part of the driver cannot be treated as wilful breach of condition no.5 on the part of the driver. If in the hurry to answer the call of nature the driver forgot to remove keys from the ignition switch he cannot be said to have committed wilful breach violation of the terms of the above condition no.5."
Repudiation of claim made by Insurance Company was also found to be invalid for the reason that since driver was not expected to carry key of the vehicle with him while getting down from the vehicle to answer nature call, particularly, when the vehicle was within his sight.
Retention of a key in the car ought not to be at all times taken as constituting so serious breach as to disentitle the insured to make the claim under the policy.
The particular Clause 5 extracted above shall be read in the context of a person deliberately doing an act that resulted in theft. If no willful act could be attributed to the insured then this clause cannot operate to exclude the liability of the insurance company. A human fallibility to forget is not the same as committing violation of terms of the insurance policy.
Case reference is *New India Assurance Co. Ltd v. Girish Gupta [2014] GCtR 6518 (NCDRC)*.
Case 13 [Motor Insurance] : Unauthorised Passengers in Goods Vehicle and Effect on Insurance Claim
In this case, a person was owner of a vehicle. He took insurance policy from NICL from one of the office of DRO-1.
Vehicle was registered in Haryana.
Period of insurance was 22 Sep 2005 to 21 Sep 2006.
Accident on 3/11/2005. Vehicle got damaged. Surveyor issued letter asking customer to give DL, permit etc.
Customer informed insurance company. Gave bills of Rs. 1.78 lacs.
NICL did not paid the insurance claim although insurance policy was valid.
NICL said that customer carried 20-22 unauthorised passengers in a goods vehicle.
Customer argued that NICL is using delaying tactics.
It was established that as per the surveyor report, there were some 20-22 persons sitting in the loaded body of the insured goods vehicle at the time of the accident. Even if customer was carrying excess passengers, insurance claim cannot be repudiated.
NICL was directed to pay interest amount of more than Rs. 50,000/- plus Rs. 3300 towards litigation expenses in addition to principal insurance claim amount.
Case reference is NICL v. Sanjeev Kumar [2017] GCtR 6519 (NCDRC).
*Case 14 [Motor Insurance] : Whether violation of terms of policy would lead to repudiation of insurance claim ?*
A person took a comprehensive insurance policy from a govt insurance company viz OICL. Insurance was done of a car. Car was registered in WB. Customer [owner of vehicle] even paid the insurance premium amount.
One person borrowed his vehicle for a short time and took away vehicle. Then vehicle met with accident.
Insurance company refused to pay insurance claim even though insurance premium was received by it. Insurance company said that vehicle was used for hire and reward. Surveyor said that vehicle was used for hire.
Matter went into litigation. DCDRC dismissed the complaint. DCDRC said that use of vehicle without payment is unexpected. SCDRC dismissed the appeal of consumer and found repudiation justified. NCDRC dismissed the petition and found repudiation justified.
Matter reached Apex Court.
After noting that insurance policy was a comprehensive policy and the accident took place during subsistence of policy, it was held that insurance claim repudiation was unjustified.
It was held that in this case, insurance claim repudiation by OICL is unjustified. Even if there has been no valid DL, claim repudiation would be unjustified. Insurance company was directed to pay the insurance claim amount.
Case reference is *Amalendu Sahoo v. OICL [2010] GCtR 5742 (SC)*.
*Case 15 : Claim Repudiation & Effect of Non-Production of Proposal Form in Litigation*
In this case when the insurance company repudiated the insurance claim and consumer went into litigation, it was seen that NICL had not produced the proposal form during litigation and it was directed that NICL had to pay interest amount plus litigation expenses in addition to principal amount of insurance claim. In this case, insurance company had repudiated the claim on the ground that the premises on which fire occurred is not covered under the insurance. Claim repudiation was found to be unjustified. Insurance company also argued that letter given by customer is fake one.
Case reference is *Supreme Papers v. NICL [2017] GCtR 6522 (SCDRC, Rajasthan)*.
Written by
VM,
Delhi
Note : AI has not been used at any stage of writing/research. No other material has been copied/referred, except full text decisions.
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