In Brief
A hydraulic excavator purchased in 2007 and insured with an agreed sum of Rs.46,56,600/- was completely destroyed in a fire in 2010. The insurer's surveyor assessed loss at Rs.25,24,273/- after deducting depreciation calculated from purchase date (not policy date) and salvage value. The insured's surveyor calculated Rs.41,90,940/- deducting 10% depreciation post-policy only. The Supreme Court held that once the insurer accepts a sum insured at policy renewal, it is bound by that figure. Depreciation must be calculated only from policy inception, not manufacture. The Court restored the State Commission award of Rs.41,90,940/-, rejecting the National Commission's revised calculation.
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