Ernakulam District Commission Holds United India Insurance Liable For Deficiency In Service For Not Adhering To The Policy Terms
The Ernakulam District Consumer Disputes Redressal Commission, headed by D.B. Binu as President, alongside members V. Ramachandran and Sreevidhia. T.N. held that although insurance agreements are legally binding and need to be interpreted strictly, the insurers should also have a responsibility to make sure that the terms of the contract are communicated clearly and...
The Ernakulam District Consumer Disputes Redressal Commission, headed by D.B. Binu as President, alongside members V. Ramachandran and Sreevidhia. T.N. held that although insurance agreements are legally binding and need to be interpreted strictly, the insurers should also have a responsibility to make sure that the terms of the contract are communicated clearly and understood, especially regarding important matters like pre-existing conditions.
Brief Facts of the Case
The complainant had taken out an Overseas Mediclaim Policy from United India Insurance Company/Insurer/OP 1. The insurance was arranged through the insurer's agent, UAE Exchange Services/OP 2, for a trip to Qatar and Abu Dhabi. This insurance policy was meant to cover costs related to sickness, accidents, lost luggage, and more. However, when the complainant became sick and faced substantial medical bills during the trip, his insurance claim was denied. The insurer, relying on details from a third-party investigation firm, concluded that the complainant's medical condition existed before obtaining the policy, therefore making the complainant ineligible for coverage. The complainant disputed this decision, stating they had not given consent for such an investigation into their medical background and had not withheld any relevant information when purchasing the policy. The complainant argued that neither the insurance company nor their agents had asked about their medical history at the time of purchasing the policy, and they had no motive to hide any information. They also asserted that the denial of their claim caused significant distress and emotional hardship. The complainant has sought compensation of Rs.5,23,077 for the medical expenses incurred, as well as additional compensation of Rs.50,000 for the distress caused by the insurer's actions.
Contentions of the Opposite Party
The insurer argued that the policy taken by the complainant clearly stated that expenses related to existing medical conditions would not covered. It was contended that the complainants had incurred medical costs for treatment for conditions like Chronic Obstructive Pulmonary Disease, hypertension, diabetes, and heart failure, all of which existed before the policy began. Subsequently, the insurer informed the complainants through a letter that their claim couldn't be honored based on the policy's terms. The insurer contended that the complainant's request for compensation, interest, or costs was not supported by sufficient evidence, so they were not entitled to any relief from the insurance company.
Observations by the Commission
The commission observed that during the policy period, the complainant faced medical expenses due to an emergency health condition. In addition to this, the complainant had purchased the policy without any specific inquiries or requirements regarding pre-existing conditions from the insurer or its agents. The commission referred to the Supreme Court judgment in Manmohan Nanda vs United India Insurance Co. Ltd., wherein it was highlighted that the purpose of a Mediclaim policy is to provide compensation for sudden and unforeseen illnesses, not explicitly excluded in the policy. Therefore, the commission deemed the rejection of the claim as a deficiency in service and an unfair trade practice, especially considering that the complainant was not explicitly informed or warned about the necessity to disclose pre-existing conditions. The commission ruled that the repudiation based on the exclusion clause of pre-existing conditions is not sustainable in this case. Furthermore, the commission cited the case of Gurmel Singh V. Branch Manager, National Insurance Co. Ltd., wherein the Supre Court ruled that Insurance companies shouldn't rely too heavily on technical details, especially when they didn't ask for or require specific information to be disclosed when the policy was purchased.
The commission directed the insurer and the exchange service to pay the claim amount of Rs.5,23,077 to the complainant, along with Rs. 40,000 as compensation for the mental agony and financial hardships, as well as Rs. 10,000 towards the cost of the proceedings.
Case Title: Mathew Vs. United India Insurance Company Ltd.
Case Number: C.C. NO 671/2016