United India Insurance Co. Ltd. vs Hyundai Engineering & Construction Co. Ltd 2024 INSC 431 – Insurance – Exclusion

Insurance Law- Insurance is a contract of indemnification, being a contract for a specific purpose, which is to cover defined losses. The courts have to read the insurance contract strictly. Essentially, the insurer cannot be asked to cover a loss that is not mentioned. Exclusion clauses in insurance contracts are interpreted strictly and against the insurer as they have the effect of completely exempting the insurer of its liabilities-the burden of proving the applicability of an exclusionary clause lies on the insurrer- But such a clause cannot be interpreted so that it conflicts with the main intention of the insurance. It is, therefore, the duty of the insurer to plead and lead cogent evidence to establish the application of such a clause. The evidence must unequivocally establish that the event sought to be excluded is specifically covered by the exclusionary clause. (Para 16-17)

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