Life Insurance Policy Can Be Repudiated For Suppression Of Material Facts Regarding Health Condition Of Insured: Kerala High Court

The Kerala High Court recently held that details regarding the illness suffered by the proposer/assured, the previous treatment administered to him including hospitalization, and so on, which are raised as specific queries in the proposal form of the insurance company are material facts, and in the event of any material suppression or furnishing of false information by the proposer/assured regarding the same, the Insurance Company would be entitled to repudiate the policy. 

Justice Sathish Ninan, further went on to observe that it would not be open for the claimant to contend that someone else had filled the proposal form on his behalf, and that the mentioning of the false particulars could thus not be attributed to him. 

"Taking it to be that or accepting that the proposal form was filled up not by the proposer but by any other person including an agent/employee of the defendant, that could only be construed to have been done for and on behalf of the proposer and on his instructions. The proposer has signed the proposal form undertaking that all the entries made in the proposal are true and correct. He cannot be heard to say that it was someone else who filled up the proposal form and that he affixed signature to the proposal form without reading or understanding the materials furnished therein," the Court observed. 

As per the factual matrix, the husband of the respondent herein had taken an insurance policy on his own life, with the former as the nominee. Pursuant to his death, when the respondent raised the claim for the amount, the same was repudiated by the petitioner/defendants, alleging the furnishing of false information and suppression of material facts by the assured in the proposal, regarding his health condition.

The trial court found that although the deceased assured person had not furnished all true facts in the proposal, the same had been filled by the agent/employee of the defendant company and that the assured could not be held responsible for incorrect facts in the proposal. The suit was thus decreed for the policy amount and the benefits thereunder. It is on being aggrieved by the same the present appeal was filed. 

The High Court, while considering the appeal, noted that there were two issues for consideration: firstly, whether the the proposer/assured furnished false information in the proposal for policy; and secondly, whether it would be open for the claimant to contend that the proposal form was filled up not by the proposer/assured but by an employee/agent of the Insurance Company and hence mentioning of false information in the proposal cannot be attributed to the proposer. 

It noted that in insurance contracts, all material facts within the knowledge of the proposer are matters to be disclosed while submitting the proposal. It observed that the health condition of the proposer/assured is a relevant factor for the insurer to decide upon whether to assure on the life or in arriving at the quantum of premium payable. 

"The information provided by a proposer/insured at the time of giving proposal are mostly matters within his knowledge in exclusion to the insurer. It is on the basis of such details that an insurance company decides to issue a policy on the life and fixes the premium payable," it was observed. 

The Court therefore observed that by answering 'No' to the question in the proposal as to whether the insured had been admitted to a hospital/nursing home for general check-up of observation, treatment or operation, when he had been admitted in Mother Hospital, Thrissur on complaints of breathlessness/palpitation, recurring chest pain and high blood pressure, and was under the treatment of a Cardiologist, amounted to furnishing of false information. 

"The Insurance Company would fix premium having due regard to the previous illness and health conditions of the proposer. Thus, it could only be concluded that there has been material suppression and furnishing of false information by the proposer/assured while availing the insurance policy. Hence, the point is answered in the affirmative," the Court found. 

The Court also went on to find that the assured could not contend that the proposal form had been filed by another when he had affixed his signature to the same. 

"...the contention of the plaintiff disowning the statements in the proposal form for the reason that it was filled up by someone else cannot be accepted or countenanced. The proposer is bound by the particulars furnished in the proposal form. The finding of the trial court to the contrary is liable to be set aside. Thus, it is held that the proposer had made a false declaration with the defendant in the proposal form or had suppressed material facts in the proposal form and hence the Insurance Company is not liable under the policy in question and is entitled to repudiate it," the Court held while allowing the appeal.

The appellants were represented by Advocate R.S. Kalkura. Advocate C.P. Ravikumar appeared on behalf of the respondent. 

Case Title: Zonal Manager, Life Insurance Corporation of India & Ors. v. Rosamma Varkey 

Citation: 2023 LiveLaw (Ker) 242

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