Case Title: Om Prakash Ahuja V. Reliance General Insurance Co. Ltd.| Civil Appeal No.s 2769-2770 of 2023
Summary
The Supreme Court has ruled that any reimbursement claim for incurred expenses must be paid in full upon the establishment of a valid insurance policy. The court also noted that an insurance company cannot subsequently deny additional claims or renewal of an insurance policy on the same ground if it has previously acknowledged that the concealment of a disease at the time of policy purchase was not significant because it was unrelated to the disease that resulted in mortality. The court ruled that the lower forum had previously dismissed the repudiation of the claim, and the insurance company had already accepted it. The court observed that the insurance company cannot use the same justification to deny the appellant’s renewal of the insurance policy.
In 2008, the insurance company rejected claims related to the treatment of the appellant’s wife. The appellant filed a complaint with the district forum, which upheld the decision and nullified the insurance company’s denial of the claims. The insurance company appealed the decision to the State Commission, but its challenge was vain. The insurance company then filed a challenge with the National Commission regarding the directive to renew the insurance policy effective July 7, 2009. The National Commission issued an interim order mandating policy renewal in accordance with the District Forum’s directives. The policy underwent several renewals, and the appellant resubmitted a complaint in 2012 seeking reimbursement for the expenses incurred during 2009-2011 for his wife’s medical care. The insurance company declined the claim, citing the failure to disclose material information during the policy purchase.
The Apex Court reversed the National Commission’s order and reinstated the Board of Directors’ and State Forum’s decision regarding the insurance company’s renewal policy directives. The insurance company acknowledged that the non-disclosure of the disease that the appellant’s deceased wife was afflicted with at the time of policy purchase was inconsequential, and it is not permissible for the insurance company to use the same justification to deny the appellant’s renewal of the insurance policy beginning on July 7, 2009.
About the case
Upon the establishment of a valid insurance policy in favor of an individual, the Supreme Court ruled on Tuesday that any reimbursement claim for incurred expenses must be paid in full. Furthermore, it was noted that an insurance company cannot subsequently… conceal a disease that caused death if it initially determined that doing so was not material at the time the policy was purchased, because it was unrelated to the disease that caused death.
Upon the establishment of a valid insurance policy in favor of an individual, the Supreme Court ruled on Tuesday that any reimbursement claim for incurred expenses must be paid in full. It has also been noted that an insurance company cannot subsequently deny additional claims or renewal of an insurance policy on the same ground if it has previously acknowledged that the concealment of a disease at the time of policy purchase was not significant because it was unrelated to the disease that resulted in mortality. On the appeal of a spouse who had succumbed to ovarian cancer, a division bench consisting of Justices Abhay S. Oka and Rajesh Bindal deliberated.
The appellant expressed his dissatisfaction with the insurance company’s failure to reimburse him for the costs associated with the treatment of his wife. The renewal of the insurance policy was additionally denied on the basis that the appellant failed to disclose his wife’s rheumatic heart disease at the time of purchasing the initial policy, despite the fact that ovarian cancer was the cause of her death. In response to the appellant’s challenge to the National Commission’s order, the Apex Court vacates that order and reinstates the resolutions of the District Forum and State Forum concerning the insurance company’s directive to renew the policies. The Supreme Court noted that the lower forum had previously dismissed the repudiation of the claim, and that the Insurance Company had already accepted it: “…even the Insurance Company acknowledged that the omission of the disease that the appellant’s deceased wife had been suffering from at the time the policy was purchased was inconsequential, since the demise was attributed to an entirely different ailment.” There was no connection between the two. It is not permissible for the insurance company to use the same justification in order to deny the appellant’s renewal of the insurance policy beginning on July 7, 2009.
The Court made an observation. The insurance company in 2008 rejected the claims pertaining to the treatment of the appellant’s wife. In opposition to this, the appellant filed a complaint with the district forum. The District Forum upheld the complaint and nullified the insurance company’s denial of the claims. The District Forum determined that there was no correlation between the purportedly concealed illness experienced by the wife and the illness for which treatment was sought. Payment of renewal fees required the insurance provider to renew the policies beginning on the date of expiration. The insurance company appealed the decision of the district forum to the State Commission; however, its challenge was vain. The insurance company filed a challenge to the State Commission’s order before the National Commission. The insurance company filed a challenge with the National Commission regarding the directive to renew the insurance policy effective July 7, 2009. The payment in full for the treatment expenses incurred by the appellant was not subject to dispute. The insurance provider contended that the denial of the renewal was in accordance with the guidelines published by the Insurance Regulatory and Development Authority on March 31, 2009.
These guidelines state that reasons for denial of renewal may include fraud, moral hazard, or misrepresentation. As the State Commission has affirmed, the National Commission has issued an interim order mandating the policy renewal in accordance with the directives of the District Forum, pending the ultimate result of the revision petition. Following the Commission’s interim order, the insurance policy underwent several renewals. The policy, which commenced on July 7, 2009, was renewed in October 2011. The appellant resubmitted a complaint in 2012 seeking reimbursement for the expenses incurred during 2009-2011 for his wife’s medical care, which the insurance company declined. The insurance company denied the claim on the grounds that the National Commission was adjudicating the renewal of insurance policies for the specified period. The appellant was, however, ordered to reimburse the District Forum for the expenses incurred, and the State Commission affirmed the District Forum’s decision. The insurance company further appealed the State Commission’s order to the National Commission. In a joint order, the Commission resolved both the Revision petitions. Owing to the appellant’s failure to disclose material information during the policy purchase, the National Commission reversed the directive to renew the policies beyond 2009 in a common order. The commission also denied the claim for reimbursement of treatment expenses on the basis that the appellant failed to disclose that his wife had rheumatic heart disease at the time the policy was purchased. The Appellant lodged a challenge against this in the Apex Court.
The Apex Court reversed the National Commission’s order and reinstated the Board of Directors’ and State Forum’s decision regarding the insurance company’s renewal policy directives. It noted that the insurance company had already accepted the order and that its repudiation of the claim was null and void. As per the directive of the subordinate authorities, the insurance company is unable to reject the appellant’s subsequent claim or renewal once it has remitted the appellant’s dues. “On the basis that the appellant failed to disclose that his wife (who is now deceased) was afflicted with rheumatic heart disease at the time he obtained the initial policy, the renewal of the appellant’s insurance is being denied.” She passed away, however, of cancer. It is evident that the appellant purchased the initial policy on July 7, 2007 and renewed it on July 6, 2008, for an additional year. The appellant refuted the claims, even for the period during which proper coverage was accessible. The denial of policy renewals from 07.07.2009 onwards was based on the guidelines communicated by the Insurance Regulatory and Development Authority on March 31, 2009. The appellant’s claim was rejected for the exact reason that it was denied, which was the failure to disclose the disease that the appellant’s wife (now deceased) was afflicted with at the time the initial policy was purchased.
The repudiation of the insurance company’s claim was a topic of deliberation in the Consumer Protection Act of 1986 forums at various levels. The assertion that the appellant hid material facts at the time of policy purchase was insufficient to support the denial of the claim. As a result, the insurance company was ordered to provide reimbursement for the expenses accrued during the period of 07.07.2007 to 06.07.2009. The insurance provider compensated the aforementioned sum. The National Commission’s order remained unchallenged by the insurance provider. This establishes that even the insurance company acknowledged that the non-disclosure of the disease that the appellant’s deceased wife was afflicted with at the time the policy was purchased was inconsequential, given that the demise was attributed to an entirely different ailment. There was no connection between the two. It is not permissible for the insurance company to use the same justification in order to deny the appellant’s renewal of the insurance policy beginning on July 7, 2009.
