Introduction:
The Kerala High Court, in United India Insurance Company Co. Ltd. v. Salpriya and Others (W.P.(C) No. 16379 of 2023), reported as 2026 LiveLaw (Ker) 348, examined the scope of exclusion clauses in motor insurance policies relating to intoxication and the evidentiary burden required on insurers to deny compensation on such grounds. The judgment was delivered by Justice Harisankar V. Menon, who upheld an award passed by the Permanent Lok Adalat directing the insurance company to pay ₹15 lakh to the legal heirs of a deceased policyholder.
The dispute arose from a fatal road accident involving Babu, who was riding a motorcycle when he met with an accident and subsequently succumbed to injuries while undergoing treatment in hospital. Following his death, his legal heirs filed a claim before the Permanent Lok Adalat seeking compensation under the insurance policy. The Lok Adalat allowed the claim and awarded ₹15 lakh as compensation.
Aggrieved by this award, the United India Insurance Company approached the Kerala High Court under Article 226 of the Constitution, challenging the legality of the order. The insurer primarily relied on the toxicology report of the deceased, which indicated the presence of alcohol in the body, and the post-mortem report, which recorded the cause of death as occlusive coronary artery disease. The insurer contended that the policy exclusion clause relating to death or injury caused while being under the influence of intoxicating liquor applied in the present case, thereby disentitling the claimants from compensation.
The case presented an important legal question concerning the interpretation of insurance exclusion clauses, particularly whether the mere detection of alcohol in a toxicology report is sufficient to establish that the deceased was “under the influence of alcohol” at the time of the accident, and whether such a finding alone can defeat a claim for accident insurance benefits.
The Court was also required to examine the concept of proximate cause in motor accident claims, especially in cases where medical reports indicate pre-existing conditions but also suggest that accident-related injuries may have accelerated or contributed to death. The decision thus engages with settled principles of insurance law, burden of proof, and causal connection in accident compensation claims.
Arguments of the Parties:
The petitioner-insurance company contended that the award passed by the Permanent Lok Adalat was unsustainable in law. It was submitted that the toxicology report of the deceased clearly indicated the presence of alcohol in his system at the time of the accident. According to the insurer, this fact alone was sufficient to invoke the exclusion clause under the insurance policy, which disallows coverage when the insured is under the influence of intoxicating liquor or drugs.
The insurance company further argued that the post-mortem report indicated occlusive coronary artery disease as the primary cause of death. On this basis, it was contended that the death was not directly attributable to the accident, but rather to a pre-existing medical condition. The insurer therefore submitted that there was no proximate causal connection between the accident and the death, which is a necessary requirement for granting accident insurance benefits.
It was also argued that the Permanent Lok Adalat had erred in treating the accident as the cause of death despite the medical evidence suggesting otherwise. The insurer maintained that in the absence of clear proof that the accident alone caused the death, the claim ought to have been rejected. Reliance was placed on the policy terms to argue that contractual exclusions must be strictly enforced, and courts cannot rewrite insurance contracts in favour of claimants.
On the other hand, the respondents, being the legal heirs of the deceased, supported the award passed by the Permanent Lok Adalat. It was contended that the mere presence of alcohol in the toxicology report does not establish that the deceased was under its influence at the time of the accident. They argued that there was no evidence to show impairment of faculties, loss of control, or any conduct suggesting intoxication at the relevant time.
The respondents submitted that the insurer had failed to discharge the burden of proving that the exclusion clause was applicable. It was emphasised that insurance companies must establish not only consumption of alcohol but also its actual influence on the insured’s driving ability or conduct at the time of the accident.
It was further argued that the post-mortem report, while mentioning coronary artery disease as a cause of death, also clearly recorded that the injuries sustained in the accident could have accelerated or precipitated death. Therefore, the accident had a direct and proximate role in the death of the insured, making the claim fully compensable under the policy.
The respondents also relied on judicial precedents to argue that insurance claims cannot be denied on speculative or incomplete interpretation of medical evidence, and that the benefit of doubt must go in favour of the insured or their legal heirs in the absence of clear proof of exclusion.
Court’s Judgment:
The Kerala High Court dismissed the writ petition filed by the insurance company and upheld the award of the Permanent Lok Adalat, reaffirming the principle that insurers bear a strict burden of proof when invoking exclusion clauses.
Justice Harisankar V. Menon began by analysing the core issue of whether the mere presence of alcohol in a toxicology report is sufficient to establish that a person was “under the influence of alcohol” within the meaning of the insurance policy. The Court drew a clear distinction between consumption of alcohol and being under its influence. It observed that while the toxicology report confirmed the presence of alcohol in the deceased’s body, it did not, by itself, demonstrate that the deceased’s mental or physical faculties were impaired at the time of the accident.
The Court emphasised that insurance exclusion clauses must be strictly construed, and the burden lies on the insurer to establish that the conditions for exclusion are clearly satisfied. It held that there was no material on record to show that the deceased was driving under the influence of alcohol or that his ability to control the vehicle was compromised due to intoxication.
In this context, the Court relied on earlier decisions, including Oriental Insurance Co. Ltd. v. Vineetha Nair (2016 (4) KHC 392) and the Supreme Court decision in IFFCO Tokio General Insurance Co. Ltd. v. Pearl Beverages Ltd. (2021 KHC Online 6232), reiterating that denial of insurance benefits on the ground of intoxication requires evidence regarding the degree of alcohol consumption, its impact on conduct, and surrounding circumstances of the accident. A mere positive toxicology report, without more, is insufficient to invoke exclusion.
The Court further observed that the insurer had failed to produce any evidence demonstrating behavioural impairment or circumstances indicating that the deceased was under the influence of alcohol at the relevant time. Accordingly, the exclusion clause could not be applied.
On the issue of causation, the Court examined the post-mortem report, which recorded occlusive coronary artery disease as the cause of death but also stated that the injuries sustained in the accident could have accelerated or precipitated death. The Court held that medical opinions must be read as a whole and not in isolation. When the report indicated that accident injuries contributed to or accelerated death, a proximate causal connection between the accident and death was established.
The Court relied on the Supreme Court decision in Alka Shukla v. LIC of India (2019 (2) KLT 3098), which held that for accident benefit claims, there must be a proximate relationship between the accident, injuries sustained, and death. Applying this principle, the Court concluded that the chain of causation was not broken in the present case.
The Court upheld the reasoning of the Permanent Lok Adalat, which had found that the accident had a contributory role in the death of the deceased. It observed that the Lok Adalat’s award was based on proper appreciation of evidence and did not suffer from any legal infirmity warranting interference under Article 226.
Accordingly, the High Court dismissed the writ petition filed by the insurance company and affirmed the award directing payment of ₹15 lakh to the legal heirs of the deceased. The judgment reinforces the principle that insurance exclusions must be clearly proved and cannot be applied on assumptions, while also reiterating that accident compensation law must be interpreted in a manner that advances the object of social welfare embedded in insurance coverage.