Whether insurance claim can be granted if insured building is demolished by municipal corporation?

We find considerable merit in the submission which has been urged on behalf of the insurer. Clause V of the insurance policy contains an exclusion, where the destruction of the property has been caused "by order of the government or any lawfully constituted authority". The expression "by order of" means under the authority of government or of a lawfully constituted authority. There can be no dispute about the position that the Municipal Corporation is indeed a lawfully constituted authority, being a statutory authority under the Jammu and Kashmir Municipal Corporation Act 2000. From the records as well as from the pleadings before the State Commission, there is no dispute about the fundamental position that the demolition was carried out by the Municipal Corporation. The destruction was hence by order of a lawfully constituted authority. Once this be the position, there can be no manner of doubt that the exclusion under the policy of insurance was attracted.

15. The position of the common law with respect to the interpretation of exclusionary clauses in insurance policies is no different. In Cornish v. Accident Insurance Co Ltd.2, the Court of Appeal emphasized the duty of the insurer to except their liability in clear and unambiguous terms. The Court of Appeal held that:

... in a case of real doubt, the policy ought to be construed most strongly against the insurers; they frame the policy and insert the exceptions. But this principle ought only to be applied for the purpose of removing a doubt, not for the purpose of creating a doubt, or magnifying an ambiguity, when the circumstances of the case raise no real difficulty.

According to The Law Relating to Accidental Insurance3, insurers are exempt from any liability where the loss is attributable to an excepted cause which is inserted ex abundanti cautela to make it quite clear to the assured that the policy is not intended to cover such losses. The position is elucidated below:

The object of the exceptions is to define with greater precision the scope of the policy by making clear what is intended to be excluded and contrasting it with what is intended to be included.

Since exceptions are inserted in the policy mainly for the purpose of exempting the insurers from liability for a loss which, but for the exception, would be covered by the policy, they are construed against the insurers with the utmost strictness and it is the duty of the insurers to except their liability in clear and unambiguous terms. The onus of proving that the loss falls within an exception lies upon the insurers, unless by proving the language of the exception the assured is expressly required to prove that, in the circumstances, the exception does not apply.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 11885 of 2018 

Decided On: 07.12.2018

 New India Assurance Company Limited   Vs.  Rajeshwar Sharma and Ors.

Hon'ble Judges/Coram:

Dr. D.Y. Chandrachud and M.R. Shah, JJ.

Citation: (2019) 2 SCC 671

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Whether insurance company can refuse to renew policy only because insured has contracted disease during period of policy?

Respondents though were not entitled to automatic renewal, but indisputably, they were entitled to be treated fairly. We have noticed hereinbefore some of the clauses contained in the prospectus as also the insurance policy. When a policy is cancelled, the conditions precedents therefor must be fulfilled. Some reasons therefor must be assigned. When an exclusion clause is resorted to, the terms thereof must be given effect to. What was necessary is a pre-existing disease when the cover was inspected for the first time. Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason. The words `incepts for the first time' as contained in clause 4.1 as also the words `continuous and without break' if the renewal premium is paid in time, must be kept in mind as also the reasons for cancellation as contained in clause 7(1)(n) thereof.

65. Renewal of a medi-claim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic. Keeping in view the terms and conditions of the prospectus and the insurance policy, the parties are not required to go into all the formalities. The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract.

Reportable

Supreme Court of India

United India Insurance Co. Ltd vs Manubhai Dharmasinhbhai Gajera & ... on 16 May, 2008

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When insurance company can not avoid payment of Mediclaim?

The contention raised by the learned counsel
for the Insurance Company cannot stretched any
further in view of the clear cut finding by the
Apex Court in a decision in the case of United
India Insurance Company Limited v. Manubhai
Dharmasinhbhai Gajera and others, reported in
(2008) 10 SCC 404, wherein, it has been held that
“as per the terms of the prospectus and the
insurance policy in the present case what was
necessary for non-renewal was a pre-existing

disease when the cover was incepted for the first
time. Hence, only because the insured had
contracted or come to suffer a disease during the
currency of the insurance policy, the same would
not mean that the said disease shall be excluded
or that renewal could be denied on that ground.”
It has been further held that “if the insured had
made some claim in each year, the insurance
company should not refuse to renew insurance
policies only for that reason. In the same
judgment, it has been held that “Insurance
companies cannot either in their prospectus or in
the terms of the policy lay down any condition
which would be derogatory to the terms and
conditions approved by IRDA.”
12. This case can be viewed from other angle. The
disease acquired by the wife of the petitioner
was during the pendency of the Insurance Policy.
The respondents-Insurance Company renewed the
policy with loaded premium and with an assurance
that if the petitioner pays this loaded premium,
the exclusion clause will not be there in the
renewed policy. However, the respondents seem to
have backed out from their promise, as they
charged the loaded premium and kept the exclusion
clause in the renewal policy despite the fact
that the disease was acquired during the pendency
of the policy. We are living in a welfare State.
All these rules and policies are meant for the
welfare of the human beings. The authorities are

not expected to stick to technicalities and adopt
a wooden attitude while dealing with the human
beings. Once the respondent-Insurance Company has
insured a person for mediclaim, they cannot be
allowed to shift the burden on the insurer and
refuse the mediclaim at the time when person
suffers from a disease.
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 4550 of 2006

NM BIJLANI, IAS (RETD)
V
NEW INDIA ASSURANCE CO LTD & 2..
CORAM: MR.JUSTICE MOHINDER PAL
Date : 01/02/2017
Citation: AIR 2017 Guj 57

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