'Mere Alcohol Presence Not Enough to Deny Insurance': Kerala HC Upholds Compensation to Widow
Court said that insurance companies cannot reject accident claims unless it is proven that intoxication actually influenced the incident
The Kerala High Court has directed continuance of sale of liquor to the retired CISF personnel through CLMS System.
The Kerala High Court has held that insurers cannot deny compensation solely on the ground that the deceased had alcohol in his bloodstream unless it is proved that he was actually under its influence at the time of the incident.
A division bench of Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M. dismissed an appeal filed by National Insurance Company Ltd., which had challenged a 2022 single judge bench decision upholding an order of the Insurance Ombudsman, Kochi.
The Ombudsman had directed the insurer to pay Rs. 7 lakh to Smt. Hairunissa M.U., widow of K.S. Shibu, a Lascar in the Kerala Irrigation Department, who died in a motor accident in 2009.
Shibu was insured under a Group Personal Accident (GPA) policy covering government employees and teachers. On May 19, 2009, he suffered fatal injuries when his motorcycle collided with a tourist bus. His wife filed a claim for the insured amount, which the insurance company repudiated, citing a policy clause excluding deaths “whilst under the influence of intoxicating liquor or drugs".
The insurer relied on a chemical analysis report showing 154.79 mg of ethyl alcohol per 100 ml of blood, more than five times the permissible limit under Section 185 of the Motor Vehicles Act, 1988. It argued that the deceased had committed an offence of drunken driving, and hence, the exclusion clause was triggered.
The Ombudsman disagreed and directed payment of the insured sum, noting that the insurer failed to prove that Shibu was “under the influence” of alcohol at the time of the crash. The High Court’s single judge bench later upheld this finding, prompting the insurer to file a writ appeal.
During arguments before the division bench, Senior Advocate George A. Cherian for the insurer contended that insurance contracts must be interpreted strictly according to their terms. He submitted that the presence of high alcohol content was sufficient to establish intoxication, and that the court erred by requiring further proof of impairment. He also argued that the Ombudsman lacked authority to award interest on the sum.
The insurer relied on precedents including Iffco Tokio General Insurance Co. Ltd. v. Pearl Beverages Ltd. (2021), to argue that insurers may invoke exclusion clauses in cases of drunken driving, and on General Assurance Society Ltd. v. Chandmull Jain (1966), which emphasized the sanctity of contract terms.
However, the bench rejected these arguments, agreeing with the single judge bench that mere presence of alcohol in blood does not equate to being under the influence.
It noted that the burden of proof lies squarely on the insurer to show that intoxication impaired the deceased’s faculties and contributed to the accident. A chemical report alone, the court said, is insufficient for invoking an exclusion clause.
When an insurer seeks to rely on an exception clause to deny coverage, it must demonstrate actual impairment due to intoxication. Evidence regarding mere consumption of alcohol would not suffice, the bench observed.
Court further held that the insurer’s reliance on provisions of the Motor Vehicles Act was misplaced, as a violation under that statute does not automatically void insurance coverage unless the policy expressly provides so.
Finding no error or perversity in the single judge bench’s reasoning, the division bench dismissed the appeal and upheld the Ombudsman’s direction to pay compensation. The court did not award costs.
Case Title: National Insurance Co. Ltd. vs. State of Kerala and Others
Bench: Justice Sushrut Arvind Dharmadhikari and Justice Syam Kumar V.M.