Bombay HC Rules Ambiguous Terms of Insurance Policy Must be Interpreted in Interest of the Insured

The Bombay High Court has held that where there exists an ambiguity in the terms of an insurance policy, the principle of contra proferentem shall be applied to interpret.

The case concerned a writ petition filed by insurance company, TATA AIG General Insurance, against an Insurance Ombudsman award directing payment of ₹27 lakh to a widow whose husband died of a sudden cardiac arrest.

The Court noted that the absence of diagnostic tests could not invalidate a genuine claim and emphasised that insurance linked to housing loans must serve their intended purpose, and rebuked the insurer for acting without bona fides.

[TATA AIG General Insurance Ltd. v Vinay Sah]