In a major ruling that could completely change how motor insurance-related claims are settled by insurers in India, the Kerala High Court recently ruled that insurance companies cannot deny an accident-related claim solely because the driver had alcohol in their blood at the time of the accident.
As per the HC, the mere presence of alcohol in one’s body does not prove intoxication, driving negligence, and most importantly, “impairment of faculties”, which the insurer has to compulsorily establish while denying the claim.
“Evidence regarding the mere presence of alcohol would not suffice to exclude the insurer from liability”, said the court. What does this mean for policyholders when it comes to seeking claims for accidents where alcohol is involved? Read on to know more.
What actually happened?
The case involves K.S.6 Shibu, a worker in the irrigation department of the Government of Kerala, who died in a motor vehicle accident when the bike he was driving collided with a tourist bus on May 19, 2009. Shibu was covered under a group personal accident policy (GPA) issued by National Insurance Co. Ltd to cover Kerala government employees and teachers.
After his death, his widow filed for claim under this policy, which was denied by National Insurance because Shibu was under the influence of alcohol at the time of the accident.
“The claim was rejected by the appellant insurer (National Insurance), stating that the same is hit by a clause in the policy which stipulated that death occurred while the deceased was under the influence of intoxicating liquor or drugs will be an exclusion of liability”, the judgement highlighted.
However, the Kochi Insurance Ombudsman ruled in favor of the widow, awarding her a compensation of Rs 7 lakh under the policy. This was further challenged by the insurer in court.
Here is a brief timeline of what happened:
19 May 2009: K.S. Shibu dies in a motorcycle (driven by him) and bus collision.
3 January 2012: Insurance Ombudsman (Kochi) awards Rs 7 lakh to widow under insurance. However, the National Insurance challenges the order in the Kerala High Court.
14 October 2022: A single judge-bench dismisses the insurer’s petition and upholds the ombudsman award.
2023: National Insurance Co Ltd appeals again
July 2025: A division bench dismisses the appeal and upholds the ombudsman award.
What did the court say about the insurance claim?
To prove that Shibu was under the influence of alcohol during the time of the accident, National Insurance had only submitted a chemical analysis of Shibu’s blood, which showed that he had 5x the permitted limit allowed while drinking and driving a vehicle.
“The blood sample collected contains ethyl alcohol 154.79 mgs per 100 ml. blood. Based on Section 185 of the Motor Vehicles Act, 1988, it is contended that driving a vehicle by a drunken person is an offence and that as per chemical analysis report, the deceased had more than five times the relevant limit of ethyl alcohol in his body at the time of the accident”, the insurance company had appealed, as mentioned in the judgement.
However, the Kerala High Court vehemently stated that a “chemical analysis report cannot be the sole document on which the question whether the insured would fall within the exceptions/exclusion clause 5 (b) in the insurance policy should be decided”.
“Reliance is placed on the dictum laid down in Babu K. and another v. Union of India, wherein it was held that the meaning of intoxication does not take in mere consumption of alcohol or liquor, and the same is not all sufficient to bring a person under the exception of intoxication. It must be shown in the facts and circumstances of the case that the consumption of liquor had, if not caused the accident which undoubtedly would bring the accident within the mischief of the clause, but at least contributed in a perceptible way, causing the incident”, adds the judgment.
This means that mere consumption of alcohol and its presence in one’s system while driving may not be enough for the insurer to deny an accident-related claim. They also have to necessarily and conclusively prove that this consumption had contributed significantly or even led to the accident.
Moreover, to prove so is solely the responsibility of the insurer, and not the insured. The exclusion can be triggered if the insurer has been conclusively able to prove that the death or disablement of the insured person had occurred when they were under the influence of intoxicating liquor/alcohol, impairing their physical and mental faculties.
“The sole reliance placed on the chemical analysis report to show that there had been a substantial quantity of alcohol in the bloodstream of the deceased would not by itself prove that the deceased was under the influence of intoxicating alcohol as required by the relevant policy exception clause”, the judgment further added.
Also, the judgment emphasised that it was entirely the responsibility of the insurer, in this case, to prove that alcohol consumption had actually led to the accident.
“Except for the chemical analysis report, there had been no evidence tendered to unequivocally conclude whether the deceased was under the influence of intoxication of alcohol during the relevant time. The burden of proving the same was squarely upon the Insurance Company. Only if the relevant circumstances are satisfactorily proved would the exception/exclusion clause come into effect. That there was intoxication has to be proved unequivocally”, read the judgment.
As the judgment further said, when an insurer proceeds to include an exception clause in the policy to exclude coverage for accidents occurring under the influence of intoxicating liquor/ alcohol, the onus is on the insurer to demonstrate the actual impairment of faculties due to intoxication. That alone would trigger the exception clause.
The case was ultimately dismissed in favor of Shibu’s widow, upholding the ombudsman’s award to pay her Rs 7 lakh.
“The “under the influence” exclusion in motor insurance policies is triggered only if the insurer proves that through admissible evidence, that the driver’s faculties were actually impaired and that intoxication caused or materially contributed to the accident. A chemical analysis report showing blood alcohol concentration (BAC) is not, by itself, enough; the burden remains on insurers to establish both impairment and causation”, explains Alay Razvi, Managing Partner, Accord Juris.
What does this mean for policyholders?
Explains Aditya Chopra, Managing Partner, The Victoriam Legalis, “Exclusion clauses in insurance contracts are to be interpreted strictly and against the insurer since there is a possibility that it may completely exempt the insurer from its liability”.
Dont be disheartened if your claim is rejected by your insurer at the first instance, citing various policy exclusions. You can challenge this rejection at an appellate authority like the Insurance Ombudsman and even approach the court. To enforce exclusion, your insurer will have to prove it conclusively that your actions directly contributed to the accident for which you are seeking claims, else their liability will stand.
Says Tushar Kumar, Advocate, Supreme Court of India, “In this judgement, the presence of alcohol in the bloodstream was held insufficient, in the absence of proof of actual impairment, to trigger the exclusion “whilst under the influence of intoxicating liquor. The law is well-settled that such stipulations must be construed strictly against the drafter and in favour of the insured. The Hon’ble Courts have held that mere invocation of an exclusion will not suffice; the insurer must prove with cogent evidence that the risk squarely falls within the barred category, and that the exclusion has in some perceptible manner contributed to the loss”.
As per the HC, the mere presence of alcohol in one’s body does not prove intoxication, driving negligence, and most importantly, “impairment of faculties”, which the insurer has to compulsorily establish while denying the claim.
“Evidence regarding the mere presence of alcohol would not suffice to exclude the insurer from liability”, said the court. What does this mean for policyholders when it comes to seeking claims for accidents where alcohol is involved? Read on to know more.
What actually happened?
The case involves K.S.6 Shibu, a worker in the irrigation department of the Government of Kerala, who died in a motor vehicle accident when the bike he was driving collided with a tourist bus on May 19, 2009. Shibu was covered under a group personal accident policy (GPA) issued by National Insurance Co. Ltd to cover Kerala government employees and teachers.
After his death, his widow filed for claim under this policy, which was denied by National Insurance because Shibu was under the influence of alcohol at the time of the accident.
“The claim was rejected by the appellant insurer (National Insurance), stating that the same is hit by a clause in the policy which stipulated that death occurred while the deceased was under the influence of intoxicating liquor or drugs will be an exclusion of liability”, the judgement highlighted.
However, the Kochi Insurance Ombudsman ruled in favor of the widow, awarding her a compensation of Rs 7 lakh under the policy. This was further challenged by the insurer in court.
Here is a brief timeline of what happened:
19 May 2009: K.S. Shibu dies in a motorcycle (driven by him) and bus collision.
3 January 2012: Insurance Ombudsman (Kochi) awards Rs 7 lakh to widow under insurance. However, the National Insurance challenges the order in the Kerala High Court.
14 October 2022: A single judge-bench dismisses the insurer’s petition and upholds the ombudsman award.
2023: National Insurance Co Ltd appeals again
July 2025: A division bench dismisses the appeal and upholds the ombudsman award.
What did the court say about the insurance claim?
To prove that Shibu was under the influence of alcohol during the time of the accident, National Insurance had only submitted a chemical analysis of Shibu’s blood, which showed that he had 5x the permitted limit allowed while drinking and driving a vehicle.
“The blood sample collected contains ethyl alcohol 154.79 mgs per 100 ml. blood. Based on Section 185 of the Motor Vehicles Act, 1988, it is contended that driving a vehicle by a drunken person is an offence and that as per chemical analysis report, the deceased had more than five times the relevant limit of ethyl alcohol in his body at the time of the accident”, the insurance company had appealed, as mentioned in the judgement.
However, the Kerala High Court vehemently stated that a “chemical analysis report cannot be the sole document on which the question whether the insured would fall within the exceptions/exclusion clause 5 (b) in the insurance policy should be decided”.
“Reliance is placed on the dictum laid down in Babu K. and another v. Union of India, wherein it was held that the meaning of intoxication does not take in mere consumption of alcohol or liquor, and the same is not all sufficient to bring a person under the exception of intoxication. It must be shown in the facts and circumstances of the case that the consumption of liquor had, if not caused the accident which undoubtedly would bring the accident within the mischief of the clause, but at least contributed in a perceptible way, causing the incident”, adds the judgment.
This means that mere consumption of alcohol and its presence in one’s system while driving may not be enough for the insurer to deny an accident-related claim. They also have to necessarily and conclusively prove that this consumption had contributed significantly or even led to the accident.
Moreover, to prove so is solely the responsibility of the insurer, and not the insured. The exclusion can be triggered if the insurer has been conclusively able to prove that the death or disablement of the insured person had occurred when they were under the influence of intoxicating liquor/alcohol, impairing their physical and mental faculties.
“The sole reliance placed on the chemical analysis report to show that there had been a substantial quantity of alcohol in the bloodstream of the deceased would not by itself prove that the deceased was under the influence of intoxicating alcohol as required by the relevant policy exception clause”, the judgment further added.
Also, the judgment emphasised that it was entirely the responsibility of the insurer, in this case, to prove that alcohol consumption had actually led to the accident.
“Except for the chemical analysis report, there had been no evidence tendered to unequivocally conclude whether the deceased was under the influence of intoxication of alcohol during the relevant time. The burden of proving the same was squarely upon the Insurance Company. Only if the relevant circumstances are satisfactorily proved would the exception/exclusion clause come into effect. That there was intoxication has to be proved unequivocally”, read the judgment.
As the judgment further said, when an insurer proceeds to include an exception clause in the policy to exclude coverage for accidents occurring under the influence of intoxicating liquor/ alcohol, the onus is on the insurer to demonstrate the actual impairment of faculties due to intoxication. That alone would trigger the exception clause.
The case was ultimately dismissed in favor of Shibu’s widow, upholding the ombudsman’s award to pay her Rs 7 lakh.
“The “under the influence” exclusion in motor insurance policies is triggered only if the insurer proves that through admissible evidence, that the driver’s faculties were actually impaired and that intoxication caused or materially contributed to the accident. A chemical analysis report showing blood alcohol concentration (BAC) is not, by itself, enough; the burden remains on insurers to establish both impairment and causation”, explains Alay Razvi, Managing Partner, Accord Juris.
What does this mean for policyholders?
Explains Aditya Chopra, Managing Partner, The Victoriam Legalis, “Exclusion clauses in insurance contracts are to be interpreted strictly and against the insurer since there is a possibility that it may completely exempt the insurer from its liability”.
Dont be disheartened if your claim is rejected by your insurer at the first instance, citing various policy exclusions. You can challenge this rejection at an appellate authority like the Insurance Ombudsman and even approach the court. To enforce exclusion, your insurer will have to prove it conclusively that your actions directly contributed to the accident for which you are seeking claims, else their liability will stand.
Says Tushar Kumar, Advocate, Supreme Court of India, “In this judgement, the presence of alcohol in the bloodstream was held insufficient, in the absence of proof of actual impairment, to trigger the exclusion “whilst under the influence of intoxicating liquor. The law is well-settled that such stipulations must be construed strictly against the drafter and in favour of the insured. The Hon’ble Courts have held that mere invocation of an exclusion will not suffice; the insurer must prove with cogent evidence that the risk squarely falls within the barred category, and that the exclusion has in some perceptible manner contributed to the loss”.
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