Fire insurance policy - Burglary or theft preceding fire not an exclusion under the specified peril "Fire"

Supreme Court Upholds Insured's Claim in Fire Incident Case, Remits Matter to NCDRC for Reassessment Cement Corporation of India Wins Appeal Against ICICI Lombard as Supreme Court Rules Burglary Preceding Fire Not an Exclusion in Insurance Policy

In a significant judgment, the Supreme Court of India on December 16, 2025, reversed the National Consumer Disputes Redressal Commission's (NCDRC) earlier decision, reinstating the claim of Cement Corporation of India against ICICI Lombard General Insurance Company Limited. The Supreme Court held that the insurer cannot repudiate a claim for loss caused by fire on the grounds that burglary or theft preceded the fire, as long as the fire itself is not expressly excluded from the policy.

The case arose from an incident on November 1, 2006, when a fire broke out at Cement Corporation of India's Mandhar Cement Factory in Chhattisgarh following an attempted theft. The theft and subsequent fire led to significant damage, prompting the corporation to file a claim of over Rs. 2.2 crore with their insurer, ICICI Lombard. However, the insurer rejected the claim, arguing that the proximate cause of the loss was burglary, which was not covered under the policy's Riot, Strike, Malicious, and Damage (RSMD) exclusion clause.

The Supreme Court, in its judgment, emphasized that the exclusions in insurance contracts must be read strictly. It stated that while the RSMD clause excludes certain perils, it does not extend to exclude losses caused by fire when the policy does not specifically list burglary or theft as an exclusion under the fire peril. The Court also highlighted that the proximate cause of loss in a fire insurance policy is the fire itself, and any preceding events, such as theft, do not alter the insurer's liability unless explicitly stated in the policy.

Justice Vijay Bishnoi, delivering the judgment, pointed out that the fire insurance policy was a "named peril" policy, and the loss caused by fire should be indemnified, as the policy did not exclude fire caused by burglary or theft. The Court further criticized the NCDRC for misapplying the exclusion clause and remitted the matter back to the NCDRC for reassessment of the loss, directing it to expedite the process.

This ruling underscores the judiciary's stance on protecting the insured's rights and ensuring that insurance companies adhere to the letter of their contracts, providing clarity on the interpretation of exclusion clauses in insurance policies.

Bottom Line:

Fire insurance policy - Burglary/theft preceding fire not an exclusion under the specified peril "Fire" - Exclusions in insurance contracts must be read strictly - Insurer cannot repudiate claim when loss is attributable to fire covered under the policy.

Statutory provision(s): Insurance Law, Contract Law, Consumer Protection

Cement Corporation of India v. ICICI Lombard General Insurance Company Limited, (SC) : Law Finder Doc Id # 2822452