Fire Insurance | Exact Cause Of Fire Immaterial If Insured Was Not Responsible For Initiating Fire: Supreme Court
Case: New India Assurance Co Ltd v. Mudit Roadways
Coram: Justices Hrishikesh Roy and Justice Sanjay Karol
Case No.: CIVIL APPEAL NO. 339 OF 2023
Court Observation: “Therefore, it was unequivocally declared that the precise cause of a fire, whether attributed to a short circuit or any alternative factor, remains immaterial, provided the claimant is not the instigator of the fire. This case underscored the fundamental principle that an insurance company’s obligation to the insured is of much greater import….Moreover, the fire is found to have occurred within the insured warehouse and the appellant’s plea to the contrary is not believable. Therefore, it is a case of wrongful repudiation by the appellants.”
“In the realm of risk and uncertainty, individuals and organizations seek solace in the bastion of insurance – a covenant forged on the bedrock of trust. The trust serves as the cornerstone, forming the essence of the insurer-insured relationship. The fundamental principle is that insurance is governed by the doctrine of uberrima fides – there must be complete good faith on the part of the insured. The heart & soul of an insurance contract lies in the protection it accords to those who wish to be insured by it. This understanding encapsulates the foundational belief that insurance accords protection & indemnification, preserving the sanctity of trust within its clauses. Effectively, the insurer assumes a fiduciary duty to act in good faith and honor their commitment. This responsibility becomes particularly pronounced when the insured, in their actions, have not been negligent. In light of the vital role that trust plays in insurance contracts, it is important to ensure that the insurer adequately fulfills the duty that has been cast on it, by virtue of such a covenant.”
“It is not that sacrosanct that it cannot be departed from; it is not conclusive. The approved surveyor’s report may be the basis or foundation for the settlement of a claim by the insurer in respect of loss suffered by the insured but such report is neither binding upon the insurer nor insured.”
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