A recent order has dismissed a complaint filed by Raja Gems, a proprietorship firm dealing in the export and import of precious stones and jewellery, against United India Insurance Company Limited. Raja Gems sought a hefty insurance claim of Rs. 55,048,518.05 with a 15% annual interest, stemming from the alleged armed robbery of their purchased goods in San Francisco, USA.

The core of the dispute revolved around a Special Contingency Insurance Policy obtained by Raja Gems, covering their business activities, including the purchase and import of precious stones. The policy, initially issued for the period of January 28, 2000, to January 27, 2001, and subsequently renewed, provided coverage for "rough diamond/ polished and rough precious colour stones bought in U.S.A. and Belgium to be imported to India to Factory."

According to the complainant, Raja Gems procured polished emeralds and rough diamonds worth US$ 1,135,021 in December 2001 from B & B Imports in San Francisco and stored them in the leased premises and vault of B & B Imports. They claimed to have informed the insurer about this purchase via mail on December 13, 2001, requesting an increase in transit cover. However, upon receiving no response, their representative allegedly visited the insurer's Jodhpur branch on January 15, 2002, and resubmitted the letter.

Tragically, Raja Gems reported an armed robbery at the B & B Imports premises on February 4, 2002, where their recently purchased goods were allegedly looted. The San Francisco Police registered a case, but the perpetrators and the stolen goods remained untraced. The insurer was informed of the robbery through an overseas mail dated February 5, 2002, which was physically delivered on February 19, 2002.

Adding another layer to the narrative, B & B Imports also filed a case in the Federal District Court of San Francisco, naming the insurer as a defendant. While an initial ex-parte order favored Raja Gems, it was later recalled upon the insurer's application.

The United India Insurance Company contested the claim, denying several key assertions made by Raja Gems, including the rental agreement with B & B Imports, the purchase of the precious stones, the request for increased transit coverage, the occurrence of the robbery, and the timely notification of the incident.

The insurer argued that Raja Gems had failed to comply with crucial terms and conditions of the insurance policy. Specifically, they highlighted the following breaches:

• Delayed Intimation of Loss: The insurer pointed out that they were only informed about the alleged robbery 15 days after its occurrence, raising doubts about the veracity of the claim.
• Failure to Secure Goods in Certified Vaults: The policy stipulated that stones and jewellery kept abroad should be stored in secured and certified vaults installed in the rented premises. The police investigation report revealed that while a security alarm system was installed in the building, there were no surveillance cameras inside, and no security personnel were on duty at the time of the robbery. Furthermore, the proprietor of B & B Imports reportedly admitted that the premises lacked proper security.
• Lack of Proof of Timely Communication: The complainant failed to provide evidence of sending the alleged mails dated December 13, 2001 (regarding the purchase and request for increased coverage) and February 5, 2002 (regarding the robbery).

While the insurer's repudiation letter did acknowledge the receipt of the purchase information on January 15, 2002, and the robbery information on February 19, 2002, the delay in informing about the robbery remained a significant point of contention. Moreover, the proposal form for the policy renewal, submitted on January 22, 2002, did not include any request for enhanced transit coverage.

The adjudicating body, after considering the arguments and evidence presented by both parties, sided with the insurer. The order emphasized the binding nature of the policy's warranties, citing Supreme Court judgments in Suraj Mal Ram Niwas Oild Mill Pvt. Ltd. Vs. United India Insurance Company Limited and Rajankumar & Bros. (Impex) v. Oriental Insurance Co. Ltd. These judgments clearly state that a breach of warranty automatically discharges the insurer from liability, regardless of whether the breach directly impacted the risk.

In this case, the failure to store the precious stones in secured and certified vaults, as mandated by the policy, and the unreasonable delay in reporting the loss were deemed significant breaches of warranty. Consequently, the complaint filed by Raja Gems was dismissed.

This case serves as a crucial reminder of the importance of adhering to all terms and conditions of an insurance policy, particularly the clauses related to the security of insured goods and the timely reporting of any loss or damage. Failure to comply with these warranties can have severe consequences, leading to the rejection of legitimate insurance claims.