Insurance Firms Can’t Deny Claims Due To Existing Medical Conditions (High Court Verdict)
A new ruling by the Supreme Court has stated that an insurer cannot repudiate a claim once a policy has been issued by citing that an already existing medical condition that was disclosed by the insured in the proposal form.
The court has stated that the proposer is required to disclose all material facts within his knowlegde to the insurer.
Insurance Firms Cant Deny Claims Due To This?
The proposer should know all the facts and circumstances regarding the proposed insurance.
The court was ruling over an appeal filed by Manmohan Nanda against an order of the National Consumer Disputes Redressal Commission (NCDRC). His plea, seeking a claim for all medical expenses incurred in the US was rejected.
Mr. Nanda had opted for an Overseas Mediclaim Business and Holiday Policy as he planned to travel to the US. however, on arrival to the San Francisco airport, He suffered a heart attack and had to undergo an angioplasty. He then claimed the treatment expenses from the insurer.
However, these were rejected as the insurer claimed that the Mr Nanda had a history of hyperlipidaemia and diabetes and these facts were not disclosed while buying the insurance.
Proposer’s Duty Goes Beyond Client’s Disclosure
The bench of justices DY Chandrachud and BV Nagarathna said, “Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition, which was disclosed by the insured in the proposal form and which condition has led to a particular risk in respect of which the claim has been made by the insured.”
The proposer’s duty of disclosure goes beyond that has been disclosed by the proposer as the latter will only disclose what is known to him. It is the proposer’s duty to cover all the material facts which in the ordinary course of business should be known by the proposer.
As per the NCRDC, the complainant had been under statin medication, and this wasn’t disclosed while buying the mediclaim policy. Therefore, he didn’t fully disclose his health conditions.
The Supreme Court has ruled that this rejection of the policy by the United India Insurance company was illegal and not in accordance with law.