In Brief
A hydraulic excavator insured for Rs.46,56,600 was destroyed by fire after being used for eleven months under the policy. The insurance company's surveyor valued it at Rs.34,42,500 after deducting 32.5% depreciation calculated from original purchase, while the insured's surveyor valued it at Rs.41,90,940 with only 10% depreciation from policy inception. The Supreme Court held that parties bound by an agreed sum insured cannot be unilaterally disputed unless the agreement was procured by fraud, coercion, or misrepresentation. Depreciation must be calculated only from policy inception to loss date, not from original purchase. The Court awarded Rs.41,90,940 with 8% interest, restored the State Commission's judgment, and set aside the National Commission's decision.
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