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The Consequences of The Non-Disclosure of Policy Insurance Agreement
Be cautious if you fail to disclose the historical documents of insured assets before you sign the insurance policy. Even if the insurance company has conducted the survey, you can not claim compensation for damage on the ground. Here is the case.
On 31 January 1992, Intercontinental Maritime Pte, Ltd, the owner of Shipping MV Lucky Fortune as the Plaintiff, entered into a policy insurance agreement with PT. Wataka General Insurance as the Defendant.
On 4 February 1992, the plaintiff and the defendant agreed to amend the Polis of Insurance and confirmed Intercontinental Maritime Pte Ltd and PT. Layar Sentosa Shipping Corporation, as Plaintiff II, as Managing Agent, and set out the insurance coverage:
– Hull & Machinery with coverage for US.$.1.000.000,-
– Removal of Wreck for US$. 250.000,-
On 28 January 1993, when the shipping docked at the pier of Tanjung Priok, there was a stormy weather hurricane. Storms hit many Ships, and some of them sank. Two days after the occurrence, the plaintiff made a report to the defendant and sent an additional letter on 4 February 1993.
On 12 February 1993, Plaintiff I sent a claim of constructive Total Loss to the defendant and informed them that Plaintiff had appointed PT. Suisindo as Surveyor to survey the ship. And during the investigation, the defendant was also present. The result was that there was severe damage, and the cost for repair was the extent of the amount of the total coverage.
At the end of the investigation, the defendant did not give any response and signed the surveyor’s report. Finally, on 25 August 1993 and 30 June 1994, the plaintiff sent a claim report to the plaintiff. But the plaintiff refused to pay the claim on the grounds of Non-Disclosure of the Object.
Accordingly, Plaintiff, I and Plaintiff II filed a suit for default of the contract to the district court and claimed as follows:
- Insurance Claim (Hull & Machinery) for the sum of US$.1.000.000
- Removal of Wrecks US$.250.000
- Loss of potential charter hire US.$.5000
South of District Court held the decision No.88/Pdt, G/1995/PN.Jkt.Sel as follows;
- Granting the plaintiff’s claim
- Declare the defendant default to satisfy the polis insurance agreement No.01.81.92,00004, dated January 1992
- Declare the report of the surveyor of PT. Suisindo is legal and binding.
- Imposed the defendant to repay the damage for US$.1.000.000 (Hull and Machinery) and US.$.250.000 (Removal of Wreck)
The defendant appealed to the highest court, and the highest court upheld the District Court decision. Still, the defendant appealed to the Supreme Court, and The Supreme Court upheld, through decision No.916/K/Pdt/1997, upheld the Highest Court Judgment.
Still, the defendant did not satisfy with the Supreme Court Judgment and appealed for Judicial Review, and Supreme Court delivered its view as follows:
– Based on the evidence of proof delivered by the defendant before the Court, there was the report from Bureau Veritas dated 24-25 February 1992 that the previous name of Ship Carrier was Bethesda 2
– On 16 December 1990, Bethesda 2, the ship got an engine problem and caused the fire. However, the plaintiff never reported to the defendant such a condition before signing the polis insurance agreement and deemed it a Non-Disclosure.
Supreme Court, through Decision No.698 PK/Pdt/2001, reversed the previous Decision;
– Granting the appeal of Defendant PT. Wataka General Insurance.
– Reversed The supreme court Judgment