Weaponizing Judicial Delay. How Insurance Companies Convert Pending Trials Into Profits
Mohd Kumail Haider & Syed Raza Hussain
12 Aug 2026 10:00 AM IST
Insurance Contracts are fundamentally anchored as the instruments of social and financial security. Drawing its purpose from the principle of uberrimae fidei (utmost good faith), these contracts are not merely commercial arrangements, but are a welfare-oriented mechanism that provides financial stability in times of crisis. However, the operational reality of the insurance industry goes far from the moral standards and is dictated by corporate profit motives, wherein the insurers seek to minimize liability through exclusion clauses and restrictive contractual interpretations.
The dispute arises when the death of the insured is caused as a result of third-party violence. In such cases, the insurers commonly contend that the death resulting from homicide does not constitute an “accidental death” within the meaning of the policy, and falls within the ambit of contractual exclusions. The reason for death is now uncertain, and the insurers, in such uncertainty defer the settlement of claims until the criminal proceedings conclusively determine whether the act was an intentional murder or an accidental death. This delay in claim settlement is a result of the prolonged litigation process and undermines the fundamental objective of insurance by withholding immediate financial assistance when it is most needed.
To protect the social purpose of insurance, exclusion clauses should be construed narrowly and in accordance with the doctrine of contra proferentem. The larger question arises when an innocent policyholder is killed without provocation, should an exclusion clause be governed by the criminal intent of the perpetrator, or by whether the fatal event was entirely unforeseen and unprovoked from the perspective of the insured?
Criminal Trial Pendency and the Murder versus Accident contrast
In criminal jurisprudence, homicide is defined by the state of mind of the perpetrator, and proving the liability requires establishment of mens rea, presence of criminal intent, premeditation or knowledge which is sufficient for proving criminal responsibility. From this perspective, a homicidal act is deliberate, calculated and purposive in nature. It is the absolute antithesis of an accident. When insurers reject claims based on the fact that the death was a result of an intentional assault, they adopt a criminal law perspective, allowing the mental state of the perpetrator to decide the contractual rights of the insurers.
Now this approach goes against the very objective of insurance law; personal insurance policies are designed to protect the insured from unforeseen events from their own standpoint, rather than classifying such events according to the moral culpability of third parties. For the innocent insured, an unprovoked homicidal attack is neither anticipated nor invited; it is sudden, involuntary and is beyond the victim's capacity to foresee. From the victim's perspective, the occurrence bears every characteristic traditionally associated with an accidental event. The insured has no role in the actions of the perpetrator and cannot influence the criminal intent behind it; therefore, from the victim's point of view, the incident has all essential features of an accident.
The very underlying idea of the insurance contracts is providing a safeguard post an unforeseen event. The accidental nature of violent death should be assessed from the view of the insured, for whom the occurrence was unexpected and beyond voluntary control. Recognizing this distinction is not merely an academic exercise, it forms the precise conceptual threshold that Indian courts have historically relied upon to prevent arbitrary claim repudiations.
The Supreme Court in the case of Rita Devi v. New India Assurance Co. Ltd. (2000)[1] has advocated towards a victim-centric approach to prevent the insurers from misusing exclusion clauses, wherein it distinguished between murder simpliciter and accidental murder saying that where the dominant intention of felony is to kill a victim on account of personal animosity or a pre-existing motive, the death constitutes murder simpliciter, whereas where the homicide occurs incidentally to the commission of another felonious act, such as the murder of the auto rickshaw driver during the theft of the vehicle, the death is of accidental nature for the purpose of insurance contracts. The court recognized that although the perpetrator intentionally caused the death, the occurrence remained entirely unforeseen from the point of view of the insured. The court hence, in this case, leaned towards the interpretation preserving the commercial nature of the insurance contract.
The National Consumer Dispute Redressal Commission further strengthened this judgement in the case of Royal Sundaram Alliance Insurance Co. Ltd v. Pawan Balram Mulchandani (2018),[2] wherein the insured was murdered in a sudden criminal assault over an alleged property dispute, and the insurer repudiated the claim on the ground that the homicide was not an accident. The commission here emphasized that unless the policy explicitly excludes death resulting of homicide, an insurer cannot deny liability merely on the grounds that the insured was intentionally killed by the third party, the commission applying the principle of contra proferentem, the commission held that the ambiguous exclusion clauses must be interpreted against the insurer, and where the insured neither provoked the attack nor voluntarily exposed himself to risk, an unprovoked homicidal assault would fall within the ambit of accidental death from insured's perspective.
Despite these settled precedents, insurers frequently postpone the settlement process until the conclusion of criminal proceedings. Criminal proceedings demand proof beyond reasonable doubt to establish guilt; this process is prolonged for investigative purposes, appellate proceedings, etc. The contractual indemnification is now dependent on the outcome of the criminal trial, therefore importing criminal law considerations into the area of private contractual obligations. This compels the deceased's dependents to wait till the conclusion of the proceedings, in which they might not be seeking punishment but financial relief. Delaying the payment until the criminal justice system has reached a final verdict frustrates the social purpose of insurance contracts.
Section 124 Indian Contract Act
Section 124 of the Indian Contract Act, 1872, which defines a contract of indemnity, provides or an important normative foundation for interpreting insurance obligations. The provision describes a contract of indemnity where a party undertakes to save another from loss caused by the conduct of the promisor himself, or “by the conduct of any other person”. This contractual provision reflects the broader understanding that financial obligations also take place when the harm is committed by the acts of third parties. Section 124 provides us with a persuasive interpretation for a victim-centric approach in insurance contracts. Relying on exclusion clauses to repudiate claims contradicts the statutory intent of indemnity. Rather than viewing third-party violence as an automatic ground for exclusion, Indian Contract Law supports treating unprovoked third-party harm as indemnifiable risk.
Comparative Jurisprudence
The victim-centric interpretation is deeply rooted in the common law principles and the consumer protection jurisprudence, which can be understood from a landmark common law judicial pronouncement of Nisbet v. Rayne & Burn (1910),[3] wherein a cashier who was carrying his employer's money was robbed and murdered while commuting via train. The court held that although the perpetrators intentionally caused the death, the incident was accidental from the perspective of the victim as it was sudden, unforeseen and beyond his control. It was decided that the intentional conduct of a third party does not deprive an event of its accidental character in relation to the person who suffers it. This principle was relied in the Supreme Court Rita Devi judgement while distinguishing between murder simpliciter and accidental murder.
Moreover, Section 69(1) of the UK Consumer Rights Act 2015 provides “If a term in a consumer contract, or a consumer notice, could have different meanings, the meaning that is most favourable to the consumer is to prevail.” Although this provision does not have its applicability in India, it reinforces the broader principle of “contra proferentem” that the ambiguity in consumer contracts should operate in favour of the consumer.
Similarly, under the Insurance Law jurisprudence, where an exclusion clause is capable of being interpreted from either the insurer or the insured perspective, the interpretation favouring the insured should prevail. Such an approach prevents insurers from relying on ambiguous policy language to deny coverage.
Insurance is far more than a routine commercial contract; it is a vital social commitment providing for financial stability to the family. This commitment is eroded when insurers judge an unprovoked murder through the perpetrator's intent. All that a stranger's criminal state of mind overrides the contractual rights of an innocent family subverts the purpose of insurance.
A shift is essential from a perpetrator-centric understanding of accidental death to a victim-centric approach. This shift requires regulatory intervention. The Insurance Regulatory and Development Authority of India (IRDAI) should prescribe uniform guidelines defining accidental death from the insured's perspective; standardise exclusion clauses to remove ambiguity; and prescribe model wording for exclusion clauses, clearly specifying the scope of the terms “intentional injury” and “accidental death”. Require insurers to determine claims independently of pending criminal proceedings, and place the burden of proving the applicability of an exclusion upon the insurer. These measures simply restore the foundational balance of insurance contracts, ensuring that exclusion clauses operate as narrow exceptions rather than an escape route from liability, ultimately safeguarding the financial dignity of the insured's dependents.
Author Mohd Kumail Haider is an Advocate practicing at Allahabad High Court & Syed Raza Hussain is a Law student at Dharmashastra National Law University. Views are personal.
