Insurance cos must specify terms before selling policy

New Delhi, Nov 21 | Updated: Nov 22 2005, 05:30am hrs
Decrying the tendency of insurance companies denying claims on grounds of exclusion clauses, a Delhi consumer court has observed that the terms and conditions of a policy should be brought to the holders notice before he intends to obtain cover.

The insured comes to know about the terms and conditions governing the policy only after he has paid the premium and obtained the policy. This is not fair practice, the consumer disputes redressal forum (New Delhi area) said ordering full reimbursement of Rs 1 lakh to a claimant besides a compensation of Rs 12,000.

Passing the order, the forum president SL Khanna, along with members Krishna Gupta and SK Manchanda, rued the common practise followed by insurance companies of issuing the cover first, much before delivering the policy to the insured.

In order that terms and conditions are binding on the insured, they should be made part of the proposal form so that when a person intends to obtain insurance cover, he is aware of the terms and conditions which would govern the policy, the forum said.

Here Comes The Judgment
The insured comes to know about the terms and conditions governing the policy only after he has paid the premium and obtained the policy
The consumer disputes redressal forum found it as unfair practice
In order that terms and conditions are binding on the insured, they should be made part of the proposal form so that when a person intends to obtain insurance cover, he is aware of the terms and conditions
The ruling came while disposing of a complaint against United India Insurance Co which repudiated a claim citing an exclusion clause
The ruling came while disposing off a complaint against United India Insurance Co Ltd filed by Sushil Kumar, whose claim for reimbursement of Rs 1 lakh towards expenditure he had incurred on a by-pass heart surgery at a hospital was rejected.

United India repudiated the claim, citing an exclusion clause of the policy which provides that during the first year of the policy, expenses on the treatment of some diseases, including congenital internal diseases are not payable.

The forum held that The complainant is not bound by the said condition as the same was not brought to his notice when he opted for the policy.

PTI