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United India Insurance Co. Ltd. vs Levi Strauss (India) Pvt. Ltd.

Civil Appeal · 2022 INSC 500Decided 2 May 2022
Civil Appeal No. 2955 of 2022
Uday Umesh Lalit · S. Ravindra Bhat · Pamidighantam Sri Narasimha

Background

Levi Strauss (India) Pvt. Ltd. held a Standard Fire & Special Perils Policy from United India Insurance covering its stocks, while its global parent company separately held a "stock throughout" policy and an "all risks" policy from Allianz covering subsidiaries worldwide. After a fire destroyed stock worth about Rs. 12.2 crores in a warehouse, United India Insurance repudiated Levi's claim, citing a policy condition excluding coverage for losses already covered (or coverable) by a marine/global policy. The National Consumer Disputes Redressal Commission (NCDRC) ruled in Levi's favour, and the insurer appealed to the Supreme Court.

Decision Breakdown

The Supreme Court examined the doctrine of "double insurance," under which an insured cannot use overlapping policies to recover more than the actual loss, since insurance is a contract of indemnity, not profit. It found that Levi had, in fact, already received over Rs. 19 crores from Allianz (its parent company's global insurer) for the same loss, exceeding the Rs. 12.2 crore claim made against United India Insurance. Since Condition No. 4 of the domestic policy excluded liability where the loss was already covered by another (marine/global) policy, and Levi had already been fully indemnified by Allianz, the domestic insurer's repudiation was valid. The Court set aside the NCDRC order, dismissed Levi's complaint, and allowed the insurer's appeal.

Lesson Learnt

Insurance is a contract of indemnity: a policyholder can be made whole for an actual loss but cannot use multiple overlapping policies to recover more than the loss suffered; where a domestic policy validly excludes cover for losses already indemnified under another policy, an insurer can rightly refuse a duplicate claim.

Official source (sci.gov.in)View Judgment (PDF)

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