BURDEN OF PROOF UNDER INSURANCE DISPUTES

FINAL PROJECT SUBMITTED IN THE FULFILMENT OF THE COURSE

TITLED

INSURANCE LAW

Submitted to:

Ms. Nidhi Kumari

Asst. Professor of Law

ISubmitted by:

Shristy Choudhary

4th Year, B.B.A., L.L.B.

(Hons.)

Roll No. 2046

March 2022

Chanakya National Law University,

Nyaya Nagar(800001), Patna

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 DECLARATION

I, Shristy Choudhary, student of Chanakya National Law University, hereby declare that
the project work entitled “BURDEN OF PROOF UNDER INSURANCE DISPUTES”
submitted to the Chanakya National Law University, Patna is a record of an original work
done by me under the guidance of Ms. Nidhi Kumari, faculty in subject Insurance Law,
at Chanakya National Law University, Patna.

Name: SHRISTY CHOUDHARY

Roll No.2046

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 ACKNOWLEDGEMENTS

It is a fact that any research work prepared, compiled or formulated in isolation is

inexplicable to an extent. This research work, although prepared by me, is a culmination of
efforts of a lot of people who remained in veil, who gave their intense support and helped
me in the completion of this project.

Firstly, I am very grateful to my subject teacher Ms. Nidhi Kumari, without the kind
support and help of whom the completion of this project was a herculean task for me. She
donated her valuable time from her busy schedule to help me to complete this project. I
would like to thank him for her valuable suggestions towards the making of this project.

I am highly indebted to my parents and friends for their kind co-operation and
encouragement which helped me in completion of this project.

Last but not the least, I would like to thank the Almighty who kept me mentally strong and
in good health to concentrate on my project and to complete it in time.

I thank all of them!

SHRISTY CHOUDHARY

2046

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 TABLE OF CONTENTS
DECLARATION ............................................................................................................................ 2
ACKNOWLEDGEMENTS................................................................................................................ 3
HYPOTHESIS................................................................................................................................ 4
1. INTRODUCTION ................................................................................................................. 5
2. BURDEN OF PROOF UNDER LAW OF EVIDENCE ...................................................... 6
3. BURDEN OF PROOF – INSURANCE CLAIMS .............................................................. 11
4. BURDEN OF PROOF – MARINE INSURANCE ............................................................. 15
5. CONCLUSION .................................................................................................................... 19
BIBLIOGRAPHY .................................................................................................................... 20

AIMS AND OBJECTIVES

 The aim of this paper is to critically study the importance of Art. 261 i.e., “Full Faith
and Credit Clause”, by studying various case laws where this clause helped
understand the Federal Structure of the Government.
 The larger objective of the paper is to examine this clause in contemporary context
and it’s application. The recent constitutional developments on Article 261 shall be
examined critically.

HYPOTHESIS

There is a general rule that applies to the burden of proof. The Policyholder (assured) must
demonstrate that an insured peril has caused the loss or damage and, having done so, it is then
for the Insurer to demonstrate the operation of any exclusion (if they wish to deny policy
liability).

SCOPE AND LIMITATIONS

 The scope of the project will cover the theories on legal duty and its relation with
sanction, and other relevant theories. The analysis will mostly revolve around

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 positivist school of law, in order to be more concise and comprehensive.

RESEARCH METHODOLOGY

The researcher has done a doctrinal study on the topic. And since no other study was done on
this topic. To testify the hypotheses an empirical study has been undertaken and inferences
drawn accordingly since no other study has been made by any individual scholar and agencies
on the issue in the project area.
SOURCES OF DATA
The researcher use both primary as well as the secondary sources to complete this project.

CHAPTER-1
INTRODUCTION

Insurance Act came into force on July 1, 1939 to consolidate and amend the law relating to
business of insurance both of life and general insurances; this replaced earlier Life Assurance
Companies Act, 1912 and Provincial Insurance Societies Act, 1922 which were only in respect
of Life insurance. The basic object of the Act was to ensure that vast power concentrated in the
hands of insurance companies was not abused and the policy holder’s money was safely
invested. However, inspite of the regulations by the law, and restrictions by the Controller of
Insurance there was much abuse of the trust by the private insurers therefore this lead to step
towards nationalization of life insurance in 1956, and of general insurances in 1972, therefore
insurance business came to be conducted through Central Government under life insurance
corporations and general insurance corporations.

Insurance litigation presents some of the most challenging issues of any case that can be tried. The
complexities of the legal issues presented are often beyond comprehension. However, the area where
more mistakes are made and more cases are lost is burden of proof. This tends to be overlooked more
than any other area. The published opinions are littered with litigants that had excellent claims or
excellent defenses but nonetheless lost because they failed to recognize they had the burden of proof
and to come forward with evidence to meet that burden.

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This work will address the respective burdens of proof that the insurer and insured must carry during
the course of insurance litigation.

CHAPTER-2
BURDEN OF PROOF UNDER LAW OF EVIDENCE

The responsibility to prove a thing is called burden of proof. When a person is required to prove
the existence or truthfulness of a fact, he is said to have the burden of proving that fact. In a
case, many facts are alleged and they need to be proved before the court can base its judgment
on such facts. The burden of proof is the obligation on a party to establish such facts in issue
or relevant facts in a case to the required degree of certainty in order to prove its case. For
example, in a case of murder, prosecution may allege that all the conditions constituting a
murder are fulfilled. All such conditions are facts in issue and there is an obligation to prove
their existence. This obligation is a burden of proof. In general, every party has to prove a fact
that goes in his favor or against his opponent, this obligation is nothing but burden of proof.
Section 101 defines burden of proof as follows - When a person is bound to prove the existence
of any fact, it is said that the burden of proof lies on that person.

The important question is who is supposed to prove the various facts alleged in a case. In other
words, on whom should the burden of proving a fact lie? The rules for allocation of burden of
proof are governed primarily by the provisions in Section 101 to 105. The rules propounded
by these sections can be categorized as General rules and Specific rules.

GENERAL RULES

Rule 1 - As per Section 101, specifies the basic rule about who is supposed to prove a fact. It
says that whoever desires any Court to give judgment as to any legal right or liability dependent
on the existence of facts which he asserts, must prove that those facts exist. For example, A
desires a Court to give judgment that B shall be punished for a crime which A says B has
committed. A must prove that B has committed the crime. Another example - A desires a Court

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to give judgment that he is entitled to certain land in the possession of B, by reason of facts
which he asserts, and which B denies, to be true. A must prove the existence of those
facts.

Facts can be put in two categories - those that positively affirm something and those that deny
something. For example, the statement, "A is the owner of this land" is an affirmative
statement, while "B is not the owner of this land" is a denial. The rule given in Section 101
means that the person who asserts the affirmative of an issue, the burden of proof lies on him
to prove it. Thus, the person who makes the statement that "A is the owner of the land", has the
burden to prove it. This rule is useful for determining the ownership of the initial burden.
Whoever wishes the court to take certain action against the opposite party based on certain
facts, he ought to first prove those facts.

However, it is not very simple to categorize a fact as asserting the affirmative. For example, in
the case of Soward vs Legatt1, a landlord suing the tenant asserted that the tenant did not
repair the house. Here, he was asserting the negative. But the same statement can also be said
affirmatively as the tenant let the house dilapidate. In this case, Lord ABINGER observed that
in ascertaining which party is asserting the affirmative the court looks to the substance and not
the language used. Looking at the substance of this case, the plaintiff had to prove that the
premises were not repaired.

Thus, the court should arrive at the substance of the issue and should require that party to begin
who in substance, though may not be in form, alleges the affirmative of the issue.

Burden of Proof and Onus of Proof

The term Burden of Proof is used in two difference senses - the burden of proof as a matter of
law and pleading, and the burden of proof as a matter of adducing evidence also called as onus.
There is a subtle distinction between burden of proof and onus of proof, which was explained
in the case of Ranchhodbhai vs Babubhai2 . The first one is the burden to prove the main
contention of party requesting the action of the court, while the second one is the burden to
produce actual evidence. The first one is constant and is always upon the claimant but the
second one shifts to the other party as and when one party successfully produces evidence

1
1836.
2
AIR 1982 Guj 308

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supporting its case. For example, in a case where A is suing B for payment of his services, the
burden of proof as a matter of law is upon A to prove that he provided services for which B
has not paid. But if B claims that the services were not up to the mark, the onus of burden as
to adducing evidence shifts to B to prove the deficiency in service. Further, if upon providing
such evidence, A claims that the services were provided as negotiated in the contract, the onus
again shifts to A to prove that the services meet the quality as specified in the contract.

The next rule determines who has the onus of proof.

Rule 2 - As per Section 102, the burden of proof in a suit or proceeding lies on that person
who would fail if no evidence at all were given on either side. The following illustrations
explains this point. -
Illustration 1 - A sues B for land of which B is in possession, and which, as A asserts, was
left to A by the will of C, B's father. If no evidence were given on either side, B would be
entitled to retain his possession. Therefore the burden of proof is on A.
Illustration 2 - A sues B for money due on a bond. The execution of the bond is admitted, but
B says that it was obtained by fraud, which A denies. If no evidence were given on either side,
A would succeed, as the bond is not disputed and the fraud is not proved. Therefore the burden
of proof is on B.

Rule 3 - As per Section 103, the person who wants the court to believe in an alleged fact is the
one who is supposed to prove that fact unless it is provided by any law that the proof of that
fact shall lie on any particular person. For example, A prosecutes B for theft, and wishes the
Court to believe that B admitted the theft to C. A must prove the admission. Another example
- B wishes the Court to believe that, at the time in question, he was elsewhere. He must prove
it. Further, as specified in Section 104, if a person wants the court to believe in a fact that
assumes the existence of another fact, it is up to the person to prove the other fact also. For
example, A wishes to prove a dying declaration by B. A must prove B's death. A wishes to
prove, by secondary evidence, the contents of a lost document. A must prove that the
document has been lost.

Specific Rules:
These rules specifically put the burden on proving certain facts on particular persons -

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Rule 1 - As per Section 106, when any fact is especially within the knowledge of any person,
the burden of proving that fact is upon him. When a person does an act with some intention
other than that which the character and circumstances of the act suggest, the burden of proving
that intention is upon him. For example, A is charged with traveling on a railway without a
ticket. The burden of proving that he had a ticket is on him.

Rules of Presumption - Section 107 and 108 say that if a person was known to be alive within
30 yrs the presumption is that he is alive and if the person has not been heard of for seven years
by those who have naturally heard from him if he had been alive, the presumption is that the
person is death. But no presumption can be draw as to the time of death. Sections 109
establishes the burden in case of some relations such as landlord and tenant, principle and agent
etc. Further sections specify the rules about burden of proof in case of terrorism,
dowry death, and rape.

Exceptions -

Exception 1 - The general rule in criminal cases is that the accused is presumed innocent. It is
the prosecution who is required to establish the guilt of the accused without any doubt. At the
same time, the accused is not required to prove his innocence without any doubt but only has
to create reasonable doubt that he may not be guilty. Section 105 specifies an exception to this
general rule. When an accused claims the benefit of the General Exception clauses of IPC, the
burden of proving that he is entitled to such benefit is upon him. For example, if an accused
claims the benefit of insanity in a murder trial, it is up to the accused to prove that he was
insane at the time of committing the crime.
In the case of K M Nanavati vs State of Maharashtra3, SC explained this point. In this case,
Nanavati was accused of murdering Prem Ahuja, his wife's paramour, while Nanavati claimed
innocence on account of grave and sudden provocation. The defence's claim was that when
Nanavati met Prem at the latter's bedroom, Prem had just come out of the bath dressed only in
a towel; an angry Nanavati swore at Prem and proceeded to ask him if he intends to marry
Sylvia and look after his children. Prem replied, "Will I marry every woman I sleep with?",
which further enraged Nanavati. Seeing Prem go for the gun, enclosed in a brown packet,

3
1962 AIR 605, 1962 SCR Supl. (1) 567

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Nanavati too went for it and in the ensuing scuffle, Prem's hand caused the gun to go off and
instantly kill him.
Here, SC held that there is a presumption of innocence in favor of the accused as a general rule
and it is the duty of the prosecution to prove the guilt of the accused beyond any doubt. But
when an accused relies upon the general exception or proviso contained in any other part of the
Penal Code, Section 105 of the Evidence Act raises a presumption against the accused and also
throws a burden on him to rebut the said presumption. Thus, it was upon the defence to prove
that there existed a grave and sudden provocation. In absence of such proof, Nanavati was
convicted of murder.

Exception 2 - Admission - A fact which has been admitted by a party and which is against the
interest of that party, is held against the party. If the fact is contested by the party, then the
burden of proof rests upon the party who made the admission. For example, A was recorded as
saying that he committed theft at the said premises. If A wants to deny this admission, the
burden of proof rests on A to prove so.

Exception 3 - Presumptions - Court presumes the existence of certain things. For example, as
per Section 107/108, court presumes that a person is dead or alive based on how long he has
not been heard of. Section 109, presumes that when two people have been acting as per the
relationship of landlord - tenant, principle - agent, etc, such relationship still exists and anybody
who contends that such relationship has ceased to exist has to provide proof. Section 110
presumes that the person who has the possession of a property is the owner of that property.
As per Section 113A, When the question is whether the commission of suicide by a woman
had been abetted by her husband or any relative of her husband and it is shown that she had
committed suicide within a period of seven years from the date of her marriage and that her
husband or such relative of her husband had subjected her to cruelty, the court may presume,
having regard to all the other circumstances of the case, that such suicide had been abetted by
her husband or by such relative of her husband. As per Section 113B, when the question is
whether a person has committed the dowry death of a woman and it is shown that soon before
her death such woman had been subjected by such person to cruelty or harassment for, or in
connection with, any demand for dowry, the court shall presume that such person had caused
the dowry death.

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Thus, when the presumption of the court is in favor of a party, the burden of disproving it rests
on the opposite party.

CHAPTER-3

BURDEN OF PROOF – INSURANCE CLAIMS

When asked to determine coverage under an insurance policy, courts frequently recite the
principle that the insured has the burden of proving coverage under the policy and the insurer
has the burden of proving exclusions from coverage. For the majority of insurance coverage
disputes, this black letter principle requires no detailed analysis. However, in those instances
where the precise cause of a loss is unknown and intermingles between covered and excluded
perils, the line where the insured’s burden of proof is met and where the burden accordingly
shifts to the insurer to prove an exclusion from coverage can be murky indeed.

This difficult determination is illustrated by the “slab” cases arising out of the recent
destruction wrought by Hurricanes Katrina and Rita. Due to the strength of the hurricanes and
their accompanying storm surges, many homes and other structures were literally blown and
washed away, leaving nothing other than concrete slabs or pilings to show that they ever
existed. The Louisiana and Mississippi Gulf Coast areas are slotted with these sad reminders
of shattered homes and lives.

Typical homeowners’ insurance policies cover damages caused by wind, but exclude damage
caused by flooding, which is instead covered by a separate flood insurance policy underwritten
by the federal government. The courts in Mississippi and Louisiana, the two states most
affected by Hurricanes Katrina and Rita, have generally held that homeowners are entitled to
recover under their homeowners’ insurance policies for damages resulting from wind even if
additional damages was caused by flooding. [Leonard v. Nationwide Mutual Ins. Co.4]

Unfortunately, a large percentage of the homeowners affected by Hurricanes Katrina and Rita
had homeowner’s policies but did not carry flood insurance. Thus, many of the affected
homeowners are limited to recovery under their homeowners’ policies.

4
438 F. Supp. 2d 684 (S.D. Miss. 2006);

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Nothing left but the slab:

When all or part of the home remains following a catastrophic event such as a hurricane, it is
relatively easy for the insured to submit proof of some loss caused by wind damages. For
example, the insured may have pictures of missing roof tiles and water marks from water
coming in through the roof. However, when the house is completely gone, the only proof
typically offered by the insured is that the home was in the path of the hurricane and now it is
gone. By the same token, when the insurer adjusts such a loss, there is nothing definitive to
establish the amount of damage, if any, resulting from a covered peril. As a result, slab cases
raise the question of whether the insured’s burden requires proof not only that damage was
caused by wind, but also proof of the exact amount of damage caused by wind and proof
negating that the damage was caused by flooding.

While it may seem that proof that damage was caused by wind would necessarily exclude
damage caused by flooding or wave action, this cannot be assumed in slab cases. For example,
the insured may be able to present proof that the wind was strong enough to tear off his roof,
but the question becomes whether he or she must also prove that the roof was not damaged by
flood (such as falling in because flood waters caused the house to collapse), or whether the
insurer then bears the burden of proving that the roof damage was in fact caused by something
other than wind (such as flood waters). Accordingly, in slab cases, the specifics of the evidence
required for the insurer and insured to satisfy their respective burdens or proof may frequently
decide the outcome of the coverage issue.

Starting point: policy language

In answering this question, the starting point should be the policy language, particularly the
insuring clause of the policy. Although there can be many variations, property insurance
policies can be generally divided into “all risks” and “named peril” policies. As the names
imply, an “all risk’ policy covers damages caused by all perils (usually defined as fortuitous or

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accidental physical forces) which are not specifically excluded, while a “named peril” policy
covers damage caused by only those perils specifically identified in the policy5.

Logically, if the policy is an “all risk” policy, the insured should only have to make a prima
facie showing that the house was destroyed by a fortuitous or accidental force, such as wind,
and the burden would shift to the insurer to prove to what extent, if any, the loss was caused
by a specifically excluded event, such as flood water. On the other hand, if the policy is a
“named peril” policy, then the insured would presumably be required to prove the specific
amount of damage caused by the named peril.

There are very few cases which discuss the issue of burden of proof beyond reciting the general
hornbook principles, and almost none that are slab cases. In addition, the cases which do
contain such a discussion do not specifically relate allocate of the burden of proof to the policy
language.

One slab case is Lititz Mutual Ins. Co. v. Boatner6, In that case, following Hurricane Camille,
there was “nothing left of the insured property except the concrete slab on which the house had
been erected.” The homeowner’s insurer denied coverage on the grounds that the property was
destroyed by flooding rather than by wind, and flood damage was specifically excluded under
the policy. The homeowner filed suit and prevailed against the insurer at trial. The insurer
appealed.

On appeal, the insurer argued that it should have been granted a directed verdict based on the
evidence submitted by the homeowner. The court began its discussion of the appeal by noting
that the “great weight of the evidence” showed that the home had been destroyed by the wind
before the storm surge came ashore. The Court then stated:

“Without sanctioning the argument that the burden of proof was upon the homeowners, not
only to show that their property was damaged by windstorm, but to also show that it was in
no respect damaged by tidal wave, we point out the general rule [that the homeowner may
establish the amount or extent of loss by preponderance of the evidence, including
circumstantial evidence].”

5
For a discussion of “all risks” and “named peril” policies, see Counch on Insurance §148.48 – 148.68 and
Prudential Property & Casualty Ins. Co. v. Lilard-Roberts, 2002 WL 31495830 (D. Or. 2002).
6
254 So. 2d 765 (Miss. 1971).

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The court concluded that the evidence was sufficient to support an award in favor of the
homeowner without addressing which party in fact had the initial burden of proof.

Although not a slab case, the burden of proof issue was addressed more directly in Cruz v.
Hanover Ins. Co.7, There, the insurer admitted that there was some wind damage, but denied
the bulk of the homeowner’s claim. The homeowner filed suit, but lost in the trial court and
appealed the judgment. At the outset, the appellate court addressed the question of burden of
proof, stating:

“At the outset, the plaintiff suggests that the trial court erred in requiring that he bear the burden
of proving causality. That seems true. Eyewitnesses are seldom on hand at the height of a storm
and although the cases skew a bit it is a fair synthesis that proof of coverage, together with a
showing that wind damage was suffered during the course of a storm, creates a rebuttable
presumption of causality.”

Most recently, in Leonard v. Nationwide Mutual Ins. Co.8, the Court, in ruling on an owner’s
claim to recover under a homeowner’s policy for wind and water damage sustained during
Hurricane Katrina, stated:

“Under applicable Mississippi law, in a situation such as this, where the insured property
sustains damage from both wind (a covered loss) and water (an excluded loss), the insured may
recover that portion of the loss which he can prove to have been caused by wind. Grace v. Lititz
Mutual Insurance Co9.. Nationwide is not responsible for that portion of the damage it can
prove was caused by water. To the extent property is damaged by wind, and thereafter is also
damaged by water, the insured can recover that portion of the loss which he can prove to have
been caused by wind, but the insurer is not responsible for any additional loss which it can
prove to have been later caused by water. Lititz Mutual Insurance Co. v. Boatner10,

These decisions suggest that in slab cases, as long as the insured presents evidence making a
prima facie showing that wind caused substantial damage to their home, the insured will not
be required to present further evidence negating the possibility that the damage was caused by
water and the burden will instead shift to the insurer to prove the extent of damage caused by

7
239 So. 468 (La. App. 4th Cir.), writ ref’d, 241 So. 2d 255 (La. 1970).
8
438 F. Supp. 2d 684 (S.D. Miss. 2006)
9
257 So. 2d 217 (Miss. 1972)
10
254 So. 2d 765 (Miss. 1971).”

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water. This, in turn, will make it easier for the insureds to recover under their homeowner’s
policies, and more difficult for the insurers to avoid coverage under their policy exclusions.

Texas courts appear to take a different approach and place the burden of proof on the insured
to prove that a loss is caused by wind and not be any excluded peril. Coyle v. Palatine Ins.
Co11.

CHAPTER-4
BURDEN OF PROOF – MARINE INSURANCE

Introduction:

Maritime law is one of the most established and oldest types of law. It generally covers laws
or rules that govern tort, contract, marine commerce, ships, shipping, and worker compensation
claims that arise on the world’s navigable waters. Admiralty law, also referred to as maritime
law is a distinct body of law which governs maritime questions and offences. It is a body of
both domestic law governing maritime activities, and private international law governing the
relationships between private entities which operate vessels on the oceans. It deals with matters
including marine commerce, marine navigation, shipping, sailors, and the transportation of
passengers and goods by sea. Admiralty law also covers many commercial activities, although
land based or occurring wholly on land, they are considered as maritime in character. The
earliest authenticated insurance contract (i.e. that which displays the characteristics of
insurance in the sense of a transfer of risk of loss due to a fortuitous uncertain event in lieu of
payment of consideration /premium), is a marine insurance contract on a ship. Marine
Insurance is not of recent origin. Its existence can be traced back to several centuries. Questions
concerning it have naturally been coming up for a number of years and the law concerning it
had taken a definite shape much prior to 1906 when the English Marine Insurance Act was
passed with a view to codify that law.

Section 55i of the Marine Insurance Act of 1906 provides for the framework for all included
and excluded losses under Marine Insurance. It is the same provision under the Indian Marine
Insurance Act of 1963. It applies the principle of proximate cause as the underlying rule for
determining the liability of the insurer. Section 55 specifically states that there are particular

11
222 S.W. 973 (Tex. Comm. 1920).

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exclusions for which the insurer is not liable. Clause (a) says that “the insurer is not liable for
any loss attributable to the wilful misconduct of the assured….” and Clause (b) says that
“Unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss
proximately caused by delay, although the delay be caused by a peril insured against.” Section
55(2)(c) deals with the issues of wear and tear and inherent vice. Again the Act prefaces the
exclusion with: ‘Unless the policy provides,’ then goes on to state that ‘… the insurer is not
liable for any loss caused by ordinary wear and tear, ordinary leakage and breakage, inherent
vice or nature of the subject matter insured, or for any loss caused proximately by vermin or
rats, or any injury to machinery not proximately caused by maritime perils.’ Reliance is
therefore placed on the Act itself to provide for the necessary defences to the
insurer.

PROXIMATE CAUSE:

It will be noted that the insurer is only liable for losses proximately caused by a peril insured
against. The question of proximate cause has been discussed in many legal cases over the
centuries, and under English law the legal authorities are clear on the point that it is the cause
proximate in effect which must be looked to rather than that necessarily proximate in time.
This was considered in the case of Reischer v Borwich12 where a tug had been insured against
the risk of collision and damage received in collision with any object, but not against perils of
the sea. It was held that the assured could recover a total loss under the policy since the
proximate cause of the loss was the collision, on the grounds that the consequences of the
collision (the broken pipe) had never ceased to operate and that this was therefore the cause
proximate in effect, if not in time.

BURDEN OF PROOF:

As to the question of where the responsibility lies for proving that the loss has been proximately
caused by a peril insured against, under most legal systems the burden of proof is upon the
party making a claim or making an assertion to prove that their allegation is correct. In
order to discharge the burden of proof, the assured does not have to exclude all possibilities as
to how the particular damage has occurred. He is, however, required to demonstrate that the
balance of probabilities is in favour of the loss being proximately caused by a peril insured

12
(1894)

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against. If a particular loss is equally likely to have been caused by a peril not covered by the
policy, then the assured will have failed to discharge the burden of proof and will therefore be
unable to sustain a claim against his insurers. Once the assured has made out a prima facie case
that the loss or damage has occurred as a result of a peril insured against, the burden of proof
then shifts to the underwriters to set up a counter argument; that the loss or damage resulted
from a peril not insured against. Alternatively, the insurers have to prove the wilful misconduct
of the assured or his privity to wilful misconduct, a breach of warranty or that the loss or
damage comes within the terms of an exceptions clause.

WILLFUL MISCONDUCT:

Section 55(2)(a) excludes the liability of a insurer for the willful misconduct of the assured.
First as improper conduct could range from mere negligence, gross indifferent negligence,
reckless disregard and willful misconduct, it is necessary to identify the qualities of an act
which would amount to ‘willful conduct’. Secondly a more focused issue – whether the ship
owner has sent an unseaworthy ship to sail with reckless disregard constitutes an act of willful
misconduct – has to be examined. It was discussed in the case of Thomson v. Hopper in relation
to marine insurance. It needs to be examined along with the concept of privity of the assured
and unseaworthiness under Section 39(5). It is found that under both the sections, the common
phrase is ‘attributable to’ and the rule of causation is to be found in that. Thus any loss
attributable to unseaworthiness to which the assured is privy or any loss attributable to the
willful misconduct of the assured will prevent recovery under the insurance policy.
Whether a negligent act can be willful is questionable. However, the main controversy is
whether reckless indifference or reckless disregard can be construed as willful misconduct.
This issue was raised in the case of Thomson v. Hopper, where the Court held that the inaction
of the assured in showing disregard and indifference can also amount to willful misconduct.
policy.

Loss caused by delay:

Section 55(2)(b) with clarity excuses the insurer from any loss caused due to delay even if the
delay is caused by an act insured against. The proximate cause rule applies here. There might
be multiple causes for the delay but the most apt cause must be looked into. According to the
law of marine insurance, only the last cause needs to be looked into and others neglected even
though the result might have not occurred without them. But when it is an ‘all risks’ policy

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even a loss caused by a delay can be recoverable under it.vi But the term ‘risk’ needs to be
examined carefully before attributing something as recoverable under the insurance policy.
Thus if the event causing the delay/loss is accidental, then it would fall within the meaning of
the expression ‘risk’. But if the delay is expected by usual wear and tear, it could not be brought
within the ambit of ‘risk’.

Ordinary wear and tear:

The insurer is not liable for ordinary wear and tear as per Section 55(2)(c). This is simple
enough to understand and there are many case laws which have repeatedly defined what
ordinary wear and tear is and what is not. In the case of Miss Jay Jay, the Court held that the
damage caused due to ordinary action of wind and waves was ordinary wear and tear. No ship
can navigate the ocean even under the most favorable circumstances without suffering a little
decay or depreciation in value which is a part of the ordinary wear and tear if it arises from the
ordinary operations of the usual causalities of the voyage. The insurer is liable only when the
loss is beyond this ordinary wear and tear.
Similarly ordinary leakage and breakage also comes within this exclusion. Unless there is an
express clause saying that the insurer is liable under the policy for ordinary leakage and
breakage, in the normal course of events, the assured is not entitled to a claim under the same.

INHERENT VICE:

The term ‘Inherent Vice’ refers to a loss arising from “qualities inherent” in the goods
insured. In ocean cargo transit with over 15,000 different types of cargo being shipped around
the world, the application of inherent vice is a strong possibility in certain cargoes, i.e.
hydroscopic cargo, fruits and vegetables, wine, cocoa and coffee beans, iron and steel products,
wood products, fish meal, leather goods, hides and skins, flour, soybeans, plantains, potatoes,
pistachio nuts, walnuts, rubber, rugs, carpet backing, others. As inherent vice is an exception
to liability, the burden of proof is on the insurer to support the declination of any
cargo claim.
An insurer does not agree to insure against damage that is bound to happen or inevitable as a
result of the natural tendency of the cargo to deteriorate or sustain damage without an external
fortuitous accident triggering the damage.
The “inherent vice” exclusion can also apply to a loss which, due to manner in which the cargo

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is shipped, is regarded as inevitable. Damage that occurs in the course of ordinary handling and
transportation of cargoes, without the intervention of a fortuity, can be due to Inherent Vice
and would be excluded from coverage. Also, one of the 17 exceptions to an ocean carrier’s
liability in an ocean Bill of Lading is “inherent vice”.

RATS AND VERMIN:

Another aspect that is excluded from insurance is rats and vermin. If the cargo owners prefer a
claim under marine insurance if the claim is under a suitable clause in the policy, then it is
recoverable. But if the claim is the cargo is gnawed away by rats, the sea has no role in
producing the damage and hence it is not a risk wholly peculiar to the sea.

CONCLUSION
After going through various facets of Burden of Proof under law of evidence and under law of
insurance several points become absolutely clear. In the majority of claims, the cause is obvious
and so it is relatively easy to establish whether it is a peril covered by the policy. Difficulties
arise when there are exceptions in the Policy or when more than one cause has operated and
not all are covered. The proximate cause must be identified before it is possible to decide
whether the loss or damage is covered by the Policy.

There is a general rule that applies to the burden of proof. The Policyholder (assured) must
demonstrate that an insured peril has caused the loss or damage and, having done so, it is then
for the Insurer to demonstrate the operation of any exclusion(if they wish to deny polic
liability).

The situation is slightly different with an ‘All Risks Policy’. In this instance, the Policyholder
need only demonstrate that damage has occurred to the insured property during the period of
insurance. If an Insurer wishes to apply exclusion, the Insurer must then prove that the cause
was one of excluded events.

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 BIBLIOGRAPHY
BOOKS:

 Law of INSURANCE, Dr. Avtar Singh, 2nd edition, 2010.

 Law of INSURANCE, Prof. M.N.Mishra, 9th edition, 2012.
 Insurance Laws Manual (As Amendment by Insurance laws (Amendment) Act 2015),
Taxmann, 17th edition, 2016.

WEBSITES:

 http://hanumant.com/LOE-Unit11-BurdenOfProof.html
 http://www.insurancejournal.com/magazines/legalbeat/2006/11/20/75019.htm
 http://www.lawctopus.com/academike/excluded-losses-marine-insurance/
 https://www.irmi.com/articles/expert-commentary/burden-of-proof-in-coverage-
litigation

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