Policy misinterpreted? Spectrum Power’s Business Interruption claim
In January 2025, the Telangana High Court rejected an appeal filed by Spectrum Power Generation Limited (SPGL) seeking compensation from the lead insurer United India Insurance Company and co-insurers The Oriental Insurance Company andICICI Lombard for Business Interruption for a 2002 incident involving the Steam Turbine Generator (STG) at the company’s thermal power plant.
In 2021, the trial court partially ruled in favour of Spectrum Power, awarding Rs 17.79 crore along with interest and costs while rejecting the company’s claim for business interruption losses due to inadequacy of evidence provided.
The company moved the high court arguing that the trial court had misinterpreted the insurance policy concerning the business interruption claim.
The Telangana High Court reviewed the claim and upheld the trial court’s judgment and opined that the trial court had thoroughly considered all relevant evidence and correctly interpreted the policy terms.
The trial court had ruled in favour of the insurers that the business interruption claim was not payable as Spectrum Power had:
- Failed to notify the business interruption loss within the required timeframe and,
- Failed to produce any documentary evidence about the business interruption losses.
It is important that insured clients be aware of the terms and conditions of their policy. Hence, it is vindicated that every client needs a qualified, experienced insurance broker.
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