Nagpur consumer commission orders insurer to pay Rs 50 lakh claim it had rejected

An insurance company rejected a Rs 50 lakh claim after a policyholder's death, even though he had disclosed his drinking habit before the policy was issued. The company said he had also hidden that he had diabetes and high blood pressure. When the matter reached the consumer commission, the company's own papers undercut its argument. The commission said a habit disclosed before the policy was issued could not later be used as a reason to reject the claim. The Nagpur District Consumer Commission has now ordered Edelweiss Tokio Life Insurance to pay the Rs 50 lakh claim, along with 9 percent interest and damages.

The case relates to a woman's husband's life insurance policy, which he had taken out in April 2021. About two years later, on 26 January 2023, he died suddenly. His wife then applied to the insurance company for the Rs 50 lakh claim. Instead of paying the claim, the company cancelled the policy and, in September 2023, sent her a refund cheque for the premium of Rs 18,713. She then approached the consumer commission, seeking the insurance amount along with damages for mental distress.

During the hearing, the insurance company claimed that the deceased had hidden his longstanding drinking habit as well as his high blood pressure and diabetes, calling this a violation of the requirement to give complete and accurate information to the insurer. But the papers placed before the commission weakened the company's argument. The commission found that in a medical checkup form filled on 20 May 2021, before the policy was issued, the deceased had himself stated that for the past 15 years he had been drinking about 90 ml of whisky twice a month. In other words, the drinking was not hidden from the insurance company. Further, the company's panel doctor, in the medical checkup done before the policy was issued, had made no mention of high blood pressure or diabetes at all.

Based on this, the commission said that since the company's own records already showed the drinking habit before the policy was issued, it was not right to reject the claim on that ground. The commission ordered the insurance company to pay the Rs 50 lakh claim with 9 percent annual interest, to be calculated from 30 September 2023. It also ordered the company to pay the woman Rs 10,000 for physical and mental distress and a separate Rs 10,000 towards the cost of the case.

The commission also said that high blood pressure and diabetes, being lifestyle-related conditions, could not be grounds to reject an insurance claim, especially when the company's own medical checkup had made no mention of them.