Marine Hull Insurance Policy – Breach of Warranty – Repudiation of claim & Policy Cancellation
On 6.11.2006, the first instalment of premium for Marine Hull Insurance Policy for all risks associated with M.T.Crystal Vessel of Respondent No.1 was paid.
On 9.11.2006, the petitioner confirmed the risk even before submission of the signed proposal form and two other documents. The policy bears the date of 8.11.2006.
On 23.11.2006, the proposal form was signed and submitted by the respondent no.1 to the respondent no.2.
Against the column “what accidents have happened during the past three years to any vessel owned by you”, the respondent no.1 mentioned as “not applicable”.
Warranty No.8 was about non-making of any claim for any of the vessels of the Shipping fleet during the last five years.
On 5.9.2007, when M.T.Crystal vessel reached the coast of Okha, there was an incident of causing damage to the bearing of the Tanker. This was informed by the petitioner to the Respondent No.2 agent, which, in turn, the same was informed to the respondent no.1.
The claim was for the cost of towage of the vessel after engine failure. The Surveyor of the petitioner had assessed the loss at Rs.68,60,789/- in its final report dated 3.7.2008.
On 26.9.2007, the petitioner avoided sanctioning the claim on the ground that during past 2 years, two claims were reported on M.T. Twinkle, a sister vessel of its fleet.
By the letter dated 23.10.2007, the petitioner repudiated the claim, sent an endorsement of cancelling the policy as void ab initio and offered to refund the premium. This was on two grounds (i) that the incident being an accident is covered by the proposal form and (ii) settlement of claim for another vessel in respect of the incident of 9.5.2006 by IFFCO-Tokio.
On 22.9.2021, the Consumer Commission allowed the consumer complaint partly, directed respondent no.1 to deposit the total premium and directed the petitioner to restore the policy and to pay insurance claim of Rs.68,60,789/- with interest.
HELD the declaration relating to the accident was in respect of past three years, whereas the warranty of “no claim” which was not part of the signed proposal form but was an attachment to the insurance policy was in respect of past five years. Therefore, the warranty of “no claim” in the terms and conditions attached to the insurance policy will have to be necessarily read in conjunction with the declaration relating to accident made in the signed proposal form.
The contract of insurance was never based on the warranty made by the respondent no.1, the risk cover began much before signing the proposal form, the proposal form did not contain any clause for warranty, the warranty came to be incorporated only after issuance of the policy and therefore, the insurance contract was not based on warranty made by the respondent no.1.
The decision of a consumer complaint by Single Member of State Consumer Commission is violative of Sections 14(2), 16(1B) and 18 of the Consumer Protection Act, 1986.
Judgment dated 8.4.2025 of the High Court of Bombay in Writ Petition No.12656 of 2023 of Reliance General Insurance Company Ltd Vs. Seven Islands Shipping Ltd and another
