Is tsunami an insurable risk? SC to decide

NEW DELHI: Can an insurance company be made liable to pay damages caused by tsunami? The Supreme Court has agreed to settle the law on the issue.
A bench of Justices Madan B Lokur and A K Goel admitted a plea filed by a port company seeking insurance claim for the damages caused to its insured property in December 2014 calamity and issued notice to United India Insurance Company.
The company Krishnapatnam Port Company approached the court after National Consumer Commission held that tsunami was not an insurable risk and the insurance company could not be directed to pay claim of Rs 1.5 crore for the loss of its insured property.
The commission had held that insurance company was not liable as tsunami was caused because of earthquake which was excluded from policy cover. It had held that earthquake led to the loss of the insured and not tsunami. It had said that since earthquake was in the list of exclusions, the loss is not payable under the policy.
Challenging the order of the commission the port company contended that only earthquakes and volcanic eruptions were the two risks excluded from the insurance cover and the consumer body erred in including tsunami in the list.
"Since tsunami is not specifically covered under an exclusion clause, the claim arising out of a loss due to tsunami becomes payable. The National Consumer Commission made a serious error in law in expanding the scope of an exclusion clause by a legal fiction," senior counsel Shyam Divan and advocate Vipin Nair, appearing for the company, said.
"It is submitted that the National Consumer Commission made a serious error in including tsunami as an additional exclusion, although the policy excludes only earthquake and volcanic eruption. It has been repeatedly held by this Court that an insurance policy has to be strictly construed, especially an exclusion clause, and any event which is not specifically excluded cannot be brought within the exclusion clause," the petition said.
The company also challenged the commission's ruling that earthquake was the cause of loss to the property and not tsunami. "It is an admitted position that the loss was occasioned due to tsunami and to hold it otherwise, is a serious flaw in the impugned Judgment," the petition said.