Whether Demonetization is Material Change under Banker Indemnity Insurance?
With demonetization of the currency not of Rs 500/- and Rs 1000/-, these notes have become illegal tender notes. As it is “Known Facts to All”, the question is whether it is the duty of the bank to inform to the Insurer that the illegal tender notes shall also kept in their branches and the same should be considered part of the currency notes and insured. The limit of keeping the cash may also be increased at each branch. In my opinion, the Insurer and Insured are equally responsible to inform each other this material change and incorporate the term illegal tender notes. Later on the Insurer cannot repudiate the claim on this ground except the applicability of under insurance due to increase in the limit of notes at each branch. The illegal tender notes are also important for the bank as RBI will issue the new currency against these illegal tender notes only.