In a scathing critique of insurance policy loopholes, the Supreme Court dismissed as “absurd” a condition that restricts vehicle accident claims solely to incidents occurring within the insured’s premises. The ruling came in response to a case involving a Tata Hitachi Heavy Duty Crane that was denied coverage after an accident at Tata Steel’s Jamshedpur powerhouse.
A bench of Justices J.B. Pardiwala and R. Mahadevan pointed out the impracticality of such a clause, emphasizing that cranes are inherently used at construction sites, not confined office spaces. The Court expressed dismay that neither the insurer nor the policyholder had flagged this restriction earlier.
“The understanding of the Insurance Company is that only if the accident occurs within the premises mentioned in the policy, the claim is payable. A crane is always used at construction sites—how could it possibly be restricted to an office?” the bench remarked.
The crane’s owner had insured the vehicle with the respondent company, with policies renewed over the years. In 2007, while lifting material, the crane’s boom collapsed, causing significant damage. The owner repaired the vehicle and sought the insured amount, only to be told—two years later—that the claim was invalid because the accident did not happen on their own property.
Lower courts upheld the insurer’s stance based on policy terms, prompting an appeal to the Supreme Court. Reviewing the case, the Court criticized the insurer for delaying the rejection and questioned why such an illogical restriction was included in the first place.
“There is no dispute about the accident, the damage, or the quantum of loss. The Insurance Company took years to realize they wouldn’t sanction the claim, citing an impractical clause,” the bench observed.
Striking a balance between policy interpretation and justice, the Court urged the insurer to consider a reasonable payout. The company eventually agreed to compensate the appellant with ₹40–45 lakh, leading the Court to close the matter.
This ruling underscores the judiciary’s push against unreasonable insurance conditions that defy common sense, setting a precedent for fairer claim settlements.