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Supreme Court Of India

Hon'ble Judge(s): Madan B. Lokur, Deepak Gupta , JJ

(A) Insurance Act (4 of 1938) , Preamble— Claim under burglary policies - Under-insurance - Principle of - Applicability - Under-insurance means insured items valued for sum less than actual value of insured items - Principle of under-insurance applicable when groups of items insured under one heading and only some of items and not all items are lost/stolen. Principles of 'averaging out' and 'under-insurance' - Applicability.Words and Phrases - 'Under-insurance' - Meaning of. @page-SC417 Under-insurance basically means that insured has taken out insurance policy in which he has valued insured items for sum which is less than actual value of insured item. In country like India this is normally done to pay lesser premium. This is, in fact, harmful to policy holder and not to Insurance Company because even if entire insured property is lost, policy holder will only get maximum sum for which property has been insured and not a paisa more than sum insured. To give example, in case person takes out householder policy covering fire insurance and gives value of structure of his house and goods stored therein at Rs.50,00,000/- even though value of same is Rs. 1,00,00,000/- then even if entire house and goods are completely lost in fire, he cannot get amount above Rs.50,00,000/- even though value may be more. If all insured goods are lost th....