A Haryana consumer commission ordered a private life insurer to pay around Rs 5 lakh to the nominee of a deceased woman after the company rejected her death claim, alleging she had concealed a pre-existing illness. According to an Indian Express report, the commission said the insurer failed to produce even a single medical document to back its allegation, which made the denial illegal.
Along with the insured amount, the Panipat District Consumer Disputes Redressal Commission awarded Rs 11,000 as compensation for harassment and mental agony and Rs 5,500 towards litigation costs.
Son files complaint after claim is turned down
The case relates to a term insurance policy held by a woman who died of natural causes on May 15, 2019. Her son, who was the nominee, submitted the death certificate and other required documents to claim the insured sum.
According to the complaint, the insurance company refused to settle the claim. It alleged that the deceased had misrepresented facts and concealed pre-existing medical conditions while filling out the proposal form, rendering the policy void.
After a legal notice to the insurer yielded no result, the son approached the consumer commission, seeking the claim amount along with interest and compensation for mental distress and legal expenses.
Insurer’s stand: Facts were concealed, policy void
In its defence, the insurer argued that the policyholder had not disclosed critical health information when buying the policy. It claimed this non-disclosure amounted to material misrepresentation, which under insurance law can void a contract, The Indian Express report stated.
The company also contended that the policy was bought online through a digital credit marketplace, which acted as the “master policyholder” under its group term insurance plan. It said the master policyholder was responsible for ensuring that all details in the Member Information Form (MIF) were true and correct.
On this basis, the insurer maintained that the claim was not payable and that the policy had effectively been procured to defraud it.
No document produced to prove ‘previous disease’: Commission
The three-member bench—President RK Dogra and members Rekha Chaudhary and Vineet Kaushik—scrutinised the insurer’s defence and found no supporting evidence on record.
In its order dated September 14, the commission noted, “As the contention raised in the written statement is only that the complainant is not entitled because, in the declaration form, the complainant’s mother had denied any previous disease at the time of issuing the insurance policy but not even a single document has been placed on record by the respondents to prove that there was any previous disease at the time of issuing the insurance policy.”
The commission held that the insurer’s preliminary objections—that the complaint was not maintainable or was based on suppressed facts—became “completely redundant” because there was no documentary or medical evidence to substantiate the claim of concealment.
Nominee entitled to insured amount, commission rules
The order established that:
- A valid policy was issued by the insurer
- A premium of Rs 4,755 was received
- The complainant, as the nominee, was entitled to the insured sum on the death of his mother as per the policy terms
Given the absence of proof of any pre-existing illness, the commission concluded that the insurer could not legally repudiate the claim, the Indian Express report further stated.
It directed the company to pay:
- Rs 5,00,000 as the insured amount
- Rs 11,000 as compensation for harassment and mental agony
- Rs 5,500 towards litigation expenses
- Allegation of concealment must be backed by evidence
The judgment underlines a key principle for insurance disputes i.e, companies cannot reject death claims merely by alleging that the policyholder hid a medical condition.
Such allegations must be supported by documentary or medical evidence showing that:
- The illness existed at the time of buying the policy
- It was material to the risk covered
- The non-disclosure was deliberate or fraudulent.
In this case, the insurer’s file contained no medical records, doctor’s certificates, hospital documents or any other proof to show that the deceased had a “previous disease” when the policy was issued.
What consumers can do in similar cases?
For policyholders and nominees facing similar claim rejections, the order makes it clear that insurers must provide specific, evidence-based reasons for rejecting a claim. Simply alleging “non-disclosure” without supporting proof may not be enough before a consumer forum. Consumers whose claims are rejected can approach the District Consumer Commission or seek help from consumer helplines.
In Haryana, they can call the state consumer helpline at 1800-180-2087, while the National Consumer Helpline can be reached at 1915.