Insured Has A Duty To Disclose Pre Existing Aliments To Insurer : NCDRC

Brief Facts of the Case

The complainant filed a death claim to Bajaj Insurance/Insurer for his wife's two policies after her passing, with a maturity sum assured of Rs.2.5 lakh each. However, the insurer repudiated the claim, citing non-disclosure of treatments received. Feeling aggrieved, the complainant lodged a complaint in the District Forum seeking directions for the insurer to pay the claim with interest at 18% per annum from the date of the claim until actual realization, along with Rs.2 lakh compensation for mental harassment, pain, and agony, as well as Rs.50,000 for litigation expenses. The District Forum allowed the complaint subsequent to which the insurer moved to the State Commission of Haryana. The State Commission overruled the District Forum's order and ruled in favour of the insurer. Consequently, the complainant filed a revision petition in the National Commission against the State Commission's order.

Contentions of the Opposite Party

The insurer argued that although they acknowledged the issuance of the policies and receipt of the claim, they asserted that the deceased life insured (DLI) had concealed significant information about her illness and treatment while obtaining the policy. They claimed that the DLI intentionally withheld details of her ailment, constituting the suppression of material facts and the provision of false statements with the aim of obtaining the insurance policies. Through their investigation, the insurer discovered that the DLI had been treated for Acute Gastroenteritis with Septicemia with Shock and a previous Cerebrovascular Accident (CVA), as indicated in the Discharge Summary Sheet, prior to completing the proposal form. Consequently, the insurer justified the repudiation of the claim due to the non-disclosure of material facts in the policy proposal. They asserted that the decision to repudiate the claim was made in good faith following an inquiry and was therefore not indicative of any deficiency.

Observations by the Commission

The Commission observed that the case centered around the rejection of a death claim under a life insurance policy. The complainanant, acting as the nominee of the deceased policyholder, argued that the insurance company wrongfully repudiated the claim and asserted that the deceased had not concealed any material facts. On the other hand, the insurer's contentions and arguments focused on asserting that the claim was rightfully repudiated due to the non-disclosure of material facts when obtaining the insurance policy. The insurer relied on specific legal precedents, such as the case of Bajaj Allianz Life Insurance Company Ltd. v. Dalbir Kaur, (2020), and Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, (2019), to argue that the insured had a duty to disclose pre-existing ailments and health conditions to the insurer.

Furthermore, the commission observed that it was on record that the deceased had acquired life insurance policies, and the complainant filed the death claim for the two policies of his deceased wife, each with a maturity sum assured of Rs. 2.5 lakh. However, it was admitted that the insured had certain ailments that were not disclosed at the time of obtaining the insurance policies. The Commission held that the contract for life insurance is based on utmost good faith and that the insured was obligated to clearly disclose all relevant details, including medical conditions. It was also admitted that the insured had been diagnosed with various ailments and received treatment before obtaining the insurance policy in question. While the complainant asserted that the deceased insured had not concealed their previous illness, the proposal form filled by the deceased insured revealed no mention of any previous illness.

Hence, the commission found no merits in the revision petition and upheld the state commission's order.

Case Title: Subhash Kumar Vs. Branch Manager, Bajaj Allianze Life Insurance Co. Ltd. & Anr.

Case Number: R.P. No. 2049/2017