Insurance Company Told to Cover Tsunami Damages

The Madras High Court has overruled an insurance company that had denied the claims of a shipping company for losses caused by a tsunami to the shipping company’s barges.

SBK Shipping Private Limited, Cuddalore Harbour entered into a insurance contract with United India Insurance Company Limited, insuring its four barges.Banner-280120Clause IV of the contract states that the insurance covers loss or damage to the subject matter caused by perils of the seas, rivers, lakes or other navigable waters.

It also covers loss caused by other actions such as fire, violent threat and piracy where as Clause V of the contract states that the insurance shall not cover loss, damage, liability or expenses caused by earthquake or volcanic eruption.

United India Insurance Company denied the claims for damage of barges suffered by SBK Shipping Private Limited  stating the losses fall under the category ‘Perils of the Sea’ and since an earthquake (not the tsunami) was the ‘proximate cause’ (as distinct from ‘remote cause’), the losses suffered by the shipping company are excluded from insurance claims.

The division bench comprising Justice R Sudhakar and Justice S Vaidyanathan dismissed United India Insurance Company’s appeal saying, We are unable to accept the argument of the Insurance company that the earthquake is the proximate cause for the damage of the vessel.

On the contrary, it is the remote cause. If the tsunami, a peril of the sea, is the direct cause for the damage, there is no need to embark on further enquiry as to what is the proximate cause of tsunami.

The proximity is in relation to the damage and if the claim answers the same it is maintainable, the judges said.

Scientifically it is stated that the earthquake was the cause of the tsunami, but for persons who suffered the wrath of the tsunami in TN, the earthquake is virtually a remote cause.

The proximate cause for the damage caused to the property is giant tidal waves of tsunami, a ‘peril of the sea’ and not the earthquake, the judges stated.

Curated from Insurance Company Told to Cover Tsunami Damages

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