In NATIONAL INSURANCE CO. LTD vs M/S.PATTU AGENCIES, the appeal was preferred before Hon'ble Kerala High Court against order of the trial court with the primary object of the insurer being that the change of address of the insured property had not been intimated to the insurer.
The Hon'ble High Court rejecting the ground for disallowing the claim held "It is true that a policy can be avoided for misrepresentation or non-disclosure. However, the misrepresentation or non-disclosure should be a material one and it must have induced the Insurance Company to make the policy in favour of the insured. The non-disclosure or misrepresentation should have induced the insurer to enter into the contract. There must be a specific case that there was inducement to issue a policy relying on the facts disclosed by the insurer and that there was non-disclosure or misrepresentation. The test is whether the insurer would have made a different decision had the facts been correctly disclosed. Had the insurer been induced to enter into the policy on certain relevant terms and for that purpose, fraudulent non-disclosure was made, the insurer can avoid the liability. An inadvertent mistake need not tilt the balance and it would not enable the insurer to avoid the contract. A circumstance would be material which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk. The relevant question is whether the undisclosed fact would have been material in influencing the mind of a prudent insurer. In the present case, there was no misrepresentation or intentional non-disclosure. The mistake was unintentional. The mistake regarding the building number shown in the policy proposal was not aimed at causing any loss to the insurer or gaining an advantage to the insured."
The Hon'ble High Court rejecting the ground for disallowing the claim held "It is true that a policy can be avoided for misrepresentation or non-disclosure. However, the misrepresentation or non-disclosure should be a material one and it must have induced the Insurance Company to make the policy in favour of the insured. The non-disclosure or misrepresentation should have induced the insurer to enter into the contract. There must be a specific case that there was inducement to issue a policy relying on the facts disclosed by the insurer and that there was non-disclosure or misrepresentation. The test is whether the insurer would have made a different decision had the facts been correctly disclosed. Had the insurer been induced to enter into the policy on certain relevant terms and for that purpose, fraudulent non-disclosure was made, the insurer can avoid the liability. An inadvertent mistake need not tilt the balance and it would not enable the insurer to avoid the contract. A circumstance would be material which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk. The relevant question is whether the undisclosed fact would have been material in influencing the mind of a prudent insurer. In the present case, there was no misrepresentation or intentional non-disclosure. The mistake was unintentional. The mistake regarding the building number shown in the policy proposal was not aimed at causing any loss to the insurer or gaining an advantage to the insured."
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