In a landmark ruling on a vehicle theft insurance claim, the Supreme Court highlighted the necessity of a fundamental breach to deny coverage. The case involved New India Assurance Co. Ltd. (respondent) and an appellant whose truck was stolen. The court held that leaving the vehicle unattended with the key in the ignition did not amount to an open invitation for theft, and the insurer couldn’t fully deny the claim. The judgment also addressed the importance of timely intimation and outlined conditions for partial deduction in the claim amount.
Timely Intimation Cannot be a Ground for Denial
The Supreme Court cited Gurshinder Singh v. Shriram General Insurance Co. Ltd., stating that merely delaying the intimation of theft to the insurance company cannot be a valid reason to deny the claim. In this case, the appellant had lodged an FIR immediately after the theft, and the police investigation and surveyors confirmed the genuineness of the claim.
Fundamental Breach Principle
The court reiterated that any violation of insurance policy conditions must be a fundamental breach to deny the claimant any amount. The respondent had admitted the occurrence of theft, but it was not alleged that the claimant consented or connived in the theft. The court ruled that even if there was some carelessness on the part of the claimant, it did not amount to a fundamental breach, and the claim could not be denied entirely.
75% Claim Awarded on Nonstandard Basis
Relying on previous judgments like Nitin Khandelwal and Amalendu Sahoo, the court determined that in case of any contributory factor to the theft, the insurance company could only claim a proportionate deduction from the total claim amount. Therefore, the court awarded the appellant 75% of the insured claim on a nonstandard basis.
Supreme Court ruling: Insurers must prove fundamental breaches to deny claims; carelessness or delay in intimation cannot be grounds for repudiation.