Insurance condition limiting claims to accidents within insured premises is absurd

Vehicle Insurance Condition That Claim Will Be Accepted Only If Accident Occurs Within Premises Of Insured Is Absurd : Supreme Court
The #supremecourt observed that an insurance policy condition that the insurer would not be liable if the vehicle is used in any place other than the insured's premises is absurd. Given that the insured vehicle was a crane, the Court expressed its disappointment and said that cranes are always used at construction sites, and neither party pointed out this condition. “The understanding of the Insurance Company is that it is only in the event of the accident occurring within the premises i.e. the place mentioned in the insurance policy that the claim is liable to be sanctioned.
The appellant at the time of purchase of the crane and while getting it insured could have pointed out to the insurance company that how do you accept us to use the crane in our office. A crane is always used at the construction sites. At the same time even the Insurance Company kept themselves silent in this regard. Even the Insurance Company could have said that how do you intend to use the crane in your office.,” observed the bench of Justices J.B. Pardiwala and R. Mahadevan. Also Read - 'Disability No Bar To Excellence In Legal Profession' : Supreme Court Mentions Examples Of Legal Luminaries With Disabilities The present appellant had purchased a Tata Hitachi Heavy Duty Crane and got it insured through the respondent. The policy was renewed by the Insurance Company/ respondent from time to time. In the year 2007, the crane met with an accident at the powerhouse under Tata Steel Jamshedpur. While lifting material, the boom of the crane collapsed and was damaged. The appellant undertook the repair work and subsequently asked the respondent to release the insured amount. After two years, the respondent informed the appellant that since the accident had not occurred within their own premises, the claim could not be sanctioned. The challenge preferred by the appellant was dismissed by the Commercial Court and the High Court. Against this background, the present appeal was filed.
Supreme Court For convenience, the relevant portion of the policy conditions reads as: “ U S E O F V E H I C L E W IT H I N I N S U R E D'S O W N P R E M I S E S “I t is hereby under stood and agreed that the insurer shall not be liable in respect of the vehicle insured while the vehicle is being used else where than in the insured's premises except where the vehicle is specifically required for a mission to fight a fire.”
At the outset, the Court said that, while rejecting the claim, the previous decisions went strictly by the terms of the insurance policy. The Court also pointed out how for a long time the respondent did not apprise about sanctioning the claim. “There is no dispute as regards the accident. There is no dispute as regards the damage caused due to the accident. There is no dispute even as regards the quantum of damage. To that extent that it took quite a long time before the Insurance Company itself realised that they cannot sanction the claim because the accident did not occur at the address shown in the insurance policy.” In view of doing substantial justice, the Court had earlier also asked the respondent's counsel to consider paying a reasonable amount, giving meaningful interpretation to the policy. Subsequently, the respondent informed that it was willing to pay an amount of Rs.40 lakh but not exceeding Rs.45 lakh. In view of this, the Court directed the respondent to pay the said amount, including taxes, and closed the matter. Accordingly, the appeal was disposed of.

Case Name: M/S TARAPORE AND CO v. UNITED INDIA INSURANCE COMPANY LIMITED., CIVIL APPEAL NO.2387 OF 2025