Insurance Claim Rejected Over Alleged Non-Disclosure
The dispute arose after the husband of complainant Sunita Kain purchased a life insurance policy under the “India First Group Credit Life Plan” with a sum assured of ₹20 lakh. The policy became effective on June 20, 2012.
Following the insured’s death on February 24, 2014, the nominee submitted an insurance claim. However, the insurer rejected the claim in November 2014, alleging suppression of material facts related to pre-existing illnesses including diabetes and chronic kidney disease.
The complainant challenged the repudiation before the District Consumer Commission, arguing that the rejection was arbitrary and that the policy exclusions had not been properly communicated. The District Commission initially dismissed the complaint, leading to an appeal before the State Commission.
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State Commission Finds No Evidence of Material Suppression
The Delhi State Commission, comprising Justice Sangita Dhingra Sehgal and Bimla Kumari, observed that the insurer failed to establish that the deceased was suffering from any serious pre-existing disease at the time of obtaining the policy. The Commission noted that common lifestyle conditions such as diabetes alone could not automatically justify repudiation of an insurance claim.
The Commission also found that the investigation report relied upon by the insurer was contradictory and based largely on hearsay material without documentary support. It further noted that the insurer could not prove that the policy’s terms and conditions had been properly supplied to the insured.
Delay in Claim Decision Violated IRDA Guidelines
The Commission additionally took note of a delay of 213 days in repudiating the claim, observing that such delay violated regulatory timelines prescribed under Insurance Regulatory and Development Authority of India (IRDAI) guidelines.
Holding the repudiation to be a “deficiency in service,” the Commission allowed the appeal and directed the insurer to pay the ₹20 lakh sum assured with 6 percent annual interest from the date of repudiation until realization. The court also awarded ₹1 lakh as compensation for mental agony and ₹50,000 towards litigation expenses.
Growing Judicial Scrutiny Over Insurance Claim Rejections
The ruling adds to a series of consumer court decisions emphasizing that insurers cannot reject genuine claims without clear medical proof and proper documentation. Recent consumer commission rulings across different states have repeatedly held insurers liable for arbitrary repudiation of valid claims.
