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Next time you buy an insurance cover be careful in filling up all the required columns of the policy form. The Supreme Court has ruled that any non-disclosure of material facts will make the policy repudiable. In such cases, even acceptance of the policy by an agent of the insurer will not make the company liable, the apex court said.

“The terms of the contract of insurance, thus, being governed by the provisions of a statute; non-disclosure of such material facts would render the policy repudiable,” a bench comprising Justice S B Sinha and Justice H S Bedi said in a recent judgement.

The court said that where facts have not been disclosed, it is not binding on insurance companies to accept the policy. In other words, if the buyers have not furnished duly filled up forms and omitted material facts, they cannot argue that as the policy was accepted by the agent of the insurer, the company is liable for their claim.

The apex court dismissed an appeal which had challenged the order of United India Insurance Co repudiating its liability on the ground of suppression of material facts while buying its policy.

Appellant Sea Lark Fisheries was the owner of a vessel known as ‘Sea Lark’ which was used for fishing purposes. It obtained a loan from Canara Bank. At the time of sanction of loan, the bank obtained an insurance policy from the company for the vessel. The bank had supplied some information to an agent of the insurer company.

The policy was taken on April 12, 1979 to cover the period up to April 12, 1980. It was later renewed from April 12, 1980 to April 11, 1981. The vessel sunk on July 21, 1980. A claim was made which was not accepted by the insurance company.

The suit seeking claim was decreed by a single judge of Madras High Court on the ground that as the agent of the insurer, who had filled in the form himself, had kept some columns blank, the bank cannot be held responsible.

Aggrieved by it, the insurance company filed an appeal, which was allowed by the division bench of the high court. It was later challenged in the apex court.

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