Exclusion Of Coverage For Injuries Sustained During Initial Days Of Policy Issuance Is Illegal, Uttarakhand State Commission Holds Birla Sun Life Insurance Co. Liable

Brief Facts:

The Complainant purchased an insurance policy from Birla Sun Life Insurance Co. Ltd. (“Insurance Company”). At the time of procuring the policy, the Complainant was assured of coverage for accidental death and disability, critical illness, surgical care, and hospital care. It was stated that upon submission of a claim, the Insurance Company would promptly reimburse medical expenses incurred in treating the Complainant.

During the subsistence of the policy, the Complainant was travelling on his motorcycle from Nainital to his residence at Kaladhungi when a Pickup vehicle collided with his motorcycle. The collision, caused by the negligent driving of the Pickup vehicle's driver, resulted in severe injuries to the Complainant, particularly to his right leg. He was admitted to Soban Singh Jeena Base Hospital, Haldwani, and subsequently referred to Krishna Hospital & Research Hospital, Haldwani, and then to Eshan Hospital, Bareilly, for better treatment.

During his hospitalization from March 8, 2012, to April 14, 2012, the Complainant incurred medical expenses totalling Rs. 6,23,896/- at various hospitals. Following the accident, an FIR was lodged with P.S. Kotwali, Mallital, on March 12, 2012, and the Insurance Company was duly notified, with a claim subsequently submitted.

However, the Insurance Company rejected the claim citing that the date of admission to the hospital fell within 90 days from the issuance of the policy on December 29, 2011. According to the Insurance Company's policy, no benefits would be granted if hospitalization resulted directly or indirectly from any condition (disease, illness, or injury) manifesting itself within 90 days from the effective date of the rider or its latest revival date, whichever is later.

Feeling aggrieved, the Complainant filed a consumer complaint in the District Consumer Disputes Redressal Commission, Nainital (“District Commission”). The District Commission dismissed the consumer complaint.

Dissatisfied with the order of the District Commission, the Complainant filed an appeal in the State Consumer Disputes Redressal Commission, Uttarakhand (“State Commission”).

Observations by the Commission:

The State Commission found that the Complainant had indeed obtained an insurance policy, though with a different policy number than the one referenced in the complaint. This policy was issued on December 29, 2011, following the dishonour of a cheque submitted for the premium of another policy. The insurance policy in question was active at the time of the accident.

It was established that the Complainant had suffered injuries in a motor vehicle accident on March 7, 2012, while travelling from Nainital to Kaladhungi. The collision with a rashly and negligently driven Pickup vehicle caused severe injuries, including significant damage to his right leg. The Complainant received treatment at various hospitals, incurring medical expenses totalling Rs. 6,23,896/-. The Insurance Company did not dispute these expenses.

However, the Insurance Company contended that the claim was not payable due to a clause in the policy excluding coverage for injuries sustained within 90 days from the issuance of the policy. The Complainant argued that such a condition was ultra vires as per the Insurance Regulatory and Developmental Authority (“IRDA”) directions.

The State Commission concluded that the Insurance Company's reliance on the exclusion clause was not valid. It emphasized that the purpose of insurance is to provide coverage for unforeseen events, and the clause in question contradicted this principle. Therefore, the State Commission deemed the Insurance Company's refusal to honour the claim as a deficiency in service.

Consequently, the State Commission ruled in favour of the Complainant, directing the Insurance Company to pay the claim amount of Rs. 6,23,896/- along with 6% interest and Rs. 5,000/- as litigation charges. The impugned judgment and order passed by the District Commission were set aside, and the Complainant's appeal was allowed.

Case Title: Sh. Manoj Kumar Pant vs General Manager/Regional Manager, Birla Sun Life Insurance Company Limited

Case No.: First Appeal No. 214 of 2015