The case being examined by the SC pertains to loss due to the devastating 2004 disaster
Is "tsunami" an insurable risk or not under the terms of the government's Marine Hull Insurance policy covering all risks pertaining to perils at sea? The Supreme Court has decided to examine this issue pertaining to a case, in a first of its kind, arising out of damage caused to assets of the Krishnapatnam Port Trust (KPT) by the great tsunami of 2004.
KPT, a privately built port is located in Nellore district of Andhra Pradesh. It has challenged the National Consumer Disputes Redressal Commission's January 30 verdict that says, "Tsunami is an excluded risk" as the loss to KPT occurred on account of an earthquake, which was excluded in the policy, and the insurance company is not liable to reimburse the loss caused to the company.
A bench headed by Justice Madan B Lokur admitted the plea filed by KPT against United India Insurance Company Ltd, a public sector general insurance company under the ministry of finance.
The petition, filed by KPT through its counsel Vipin Nair, said in May 2004 that the insurance company had issued a policy with insured value of Rs 1.5 crore covering all risks under the MarineHull insurance policy for KPT's properties including a dredger.
The petitioner said the total sum insured was Rs 7.57 crore and a sum of Rs 4,02,872 lac was paid as the insurance premium to the company.
It also cited the breakup of the insurance cover for Marine Hull risks Rs 1.5 crore, dismantling risks (Rs 1.5 crore), burglary risks (Rs 1.5 crore), transportation risks (Rs 1.5 crore), personal accident cover for the crew (Rs 7 lakh), third party liability (Rs1.5 cr).
The dredger, which is an ocean vessel used for removal of material like silt, rocks, debris etc in any excavation, cleaning or deepening of any port or harbour in any river or sea.
Due to the devastating tsunami in December 2004 the insured dradger was submerged in the sea at Krishnapatanam Village in Andhra Pradesh.
A surveyor of the insurance company in July 2005 had given the assessment saying it was a "constructive total loss" and assessed the value of loss about Rs 1.1 crore.
The petitioner's counsel argued that the ITC Port Risks Clause 4 covers damage or loss to the insured caused by "perils of the seas, rivers, lakes or other navigable waters".
Clause 5, however, provides for an exception and states that "Earthquake and Volcanic Eruption" shall not be covered under the policy. It is significant to note that "Tsunami" has not been excluded under this clause and therefore would be an insurable risk.
The National Consumer Commission had rejected the argument and said "Tsunami" also stands excluded as a risk under the policy in view of the fact that it was an 'Earthquake' which was the proximate cause for Tsunami.
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