8 July 2024


National Consumer Disputes Redressal Commission

Mehta Watch Industries V. United India Insurance Co. Ltd.



Contract of insurance is a contract of good faith (uberrima fides)

Instant First Appeal filed against impugned order of State Commission. Complainant obtained an insurance policy from the respondent, United India Insurance Company for their factory and godown premises, against burglary and house-breaking for an insured sum of Rs.20 lakhs. During the intervening period, there was theft at the factory premises and goods were stolen by making hole into a wall and taking keys of safe from the drawer and also by opening and damaging the safe. Consumer complaint was filed. State Commission decided against Appellant holding that there had been clear violation of conditions no.7 and 8(a) of the policy and also the complainant could not ensure the presence of watchman as stated in column 6 of the proposal form and hence, there was no deficiency in service on the part of the OP insurance company.

There was no watchman on duty, when theft took place and also the thieves used the keys placed in the drawer on the premises in question. Commission held that, Complainant failed to keep their premises guarded as per the commitment made in the proposal form with the insurer. Further, it has been stated in special condition no.2 of the policy that the keys of the safe or strongroom shall not be left on the premises out of business hours, unless the premises are occupied by the insured or by his authorised employee, in which case, the keys shall be deposited in a secure place not in the vicinity of the safe or strongroom.

Further, as per exclusion Clause no.7 of insurance policy, ‘loss of money and/or other property abstracted from the safe following use of key to the said safe or any duplicate thereof belonging to the insured unless such key has been obtained by assault or violence or any threat. Further, in accordance with clause 8 (b) of the exclusion clause, the action of the complainant in not deploying the watchman or keeping the duplicate keys on the table or in the cubboard etc. amounts to increasing risks to the property in question and hence, there is violation of clause 8 (b) of the policy as well.

It is a settled legal preposition that, contract of insurance is a contract of good faith (uberrima fides ). Insurance company justified in repudiating claim, taking plea that there had been violation of material terms and conditions, governing insurance policy.

Tags : Insurance Compensation Contract Good faith

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