Chennai: Tsunami is an insurable risk, and hence an insurance company is not correct in denying the insured sum to a shipping company on the ground that tsunami is an earthquake-related activity not covered by marine insurance policy , Madras high court has said.

The issue was raised by Cuddalore-based SBK Shipping Private Limited, which said four of its barges had been destroyed in the December 24, 2004 tsunami that hit the east coast of India, killing several thousand people and causing material damage worth crores of rupees.

The company raised a claim for Rs 14.13 lakh, but the United India Insurance repudiated the claim saying tsunami is not a 'port risk' for which the barges had been insured.The proximate cause of tsunami is earthquake, which is not covered, it said.

Clause 4 of the contract stated that the insurance covered 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 . Clause 5, however, says insurance shall not cover loss, damage, liability or expenses caused by earthquake or volcanic eruption.

After a single judge ruled in favour of the shipping company , the insurance firm filed the present appeal.

Rejecting it, a division bench of Justice R Sudhakar and Justice S Vaidyanathan said: "In the present case there is no ambiguity in the contract because all forms of peril of sea is covered. The purpose of the insurance policy is to secure an indemnity against accidents of a speci fied nature, which may happen. In the case on hand, the tidal waves arose in the mighty ocean and hit the coastlines of several continents and ravaged the coastal areas far and near. The loss in the present case occurred due to giant tidal waves which hit the barge with great force and damaged it. We have no hesitation to accept that damage was caused due to the perils of the sea and that is the proximate cause, they said it is tsunami, and not earthquake, which is the proximate cause for tsunami."



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