INSURER CANNOT DISPUTE ADMITTED INSURED DECLARED VALUE AFTER ACCEPTING PREMIUM IN TOTAL LOSS CLAIMS

The appellant (original plaintiff), a transport business owner, insured his Ashok Leyland truck with the respondent Insurance Company under a comprehensive policy for an estimated value of ₹5,50,000/-

On 18.07.2000, during the policy period, the truck was electrocuted and suffered extensive damage, treated as a "total loss"

The Trial Court partly allowed the suit, awarding only ₹2,55,000/- based on a surveyor’s report which assessed the market value lower than the insured value

1. Whether the Trial Court correctly appreciated the evidence and law while awarding a reduced compensation of ₹2,55,000/- instead of the Insured Declared Value (IDV)?

The court applied the principle of contractual bindingness in insurance law, specifically regarding the "Insured Declared Value."

It relied on the Supreme Court precedent Dharmendra Goel v. Oriental Insurance Company Ltd. (2008) 8 SCC 279, which holds that once an insurer accepts a particular valuation of a vehicle and collects a premium based on that valuation, it cannot subsequently dispute that value to pay a lower amount in the event of a total loss shortly thereafter

The High Court observed that the Insurance Company had accepted the truck's value at ₹5,50,000/- at the time of policy issuance and charged a specific premium of ₹1,150/- for "own damage" coverage based on that figure

The court found that the Trial Court erred by relying solely on the surveyor’s speculative market assessment at Exh. 40

Following the Dharmendra Goel ratio, the court reasoned that since the accident occurred only seven months into the policy, the value could not have depreciated to the extent claimed by the surveyor

The court determined that while the full IDV was the starting point, a reasonable deduction for salvage was appropriate.

The court directed the Insurance Company to pay this amount with interest at 6% p.a. from the date of the suit until realization and ordered the balance amount to be deposited within 12 weeks