The Supreme Court has reaffirmed a vital principle in insurance law — that the source of a fire is irrelevant if the insured did not cause it. The ruling came as the Court dismissed an appeal by the National Insurance Company, siding instead with Orion Conmerx, whose property was damaged in a 2010 blaze.
A bench of Justices Dipankar Datta and Manmohan made it clear that the insurer’s attempt to deny the claim based on speculation about how the fire began was legally unsustainable. “Once it is established that the loss is due to fire and there is no allegation or finding that the insured instigated it, the cause becomes immaterial,” the Court stated. “It must then be presumed that the fire was accidental and within the scope of the policy.”
The dispute arose after the insurance company rejected Orion Conmerx’s claim, citing a surveyor’s report that vaguely described the incident as “not accidental.” The judges found this reasoning “inconclusive and deeply flawed,” pointing out that no evidence of fraud or willful act by the insured had been presented.
Citing its earlier decision in New India Assurance Co. Ltd. vs. Mudit Roadways (2024), the Court reiterated that the purpose of fire insurance is to provide indemnity, not to subject policyholders to an impossible burden of proving how the fire began. “Demanding proof of the exact cause would defeat the very intent of insurance protection,” the judgment observed.
The Court then restated the key tests for determining liability in fire insurance:
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There must be an actual fire — mere heat or fermentation is not enough.
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The fire must affect something that should not have been burning.
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The event must carry an element of accident, and even if the fire is caused by a third party without the insured’s consent, it is to be treated as accidental.
Finding the insurer’s stance “contrary to record, arbitrary, and perverse,” the Court dismissed the appeal and upheld Orion Conmerx’s claim — reinforcing once again that justice, not technicality, must guide the interpretation of indemnity.
