Can an insurer repudiate a claim on the ground that there was non- disclosure of a pre-existing medical condition?
In arecent case of L.I.C. of India v.Mamta Sipani decided on 2nd March, 2022, the Hon’ble National Consumer Dispute Redressal Commission (NCDRC)considered whether non-disclosure of a pre-existing medical condition on the proposal form can be a ground for repudiation of the claim.
The dispute arose upon repudiation of a claim raised by the nominee/widow on behalf of the insured who had died in the hospital while being treated. The insurer had cited non-disclosure of certain pre-existing medical conditions in the proposal form as the reason for repudiation. The district forum held that the insured was unaware of such pre-existing medical condition at the time of filing of the proposal form and
therefore, the insurer was not justified in repudiating the claim. The insurer then appealed against this orderto the State Commission, which upheld the decision of the District Commission. Aggrieved by the order of the State Commission, the Appellant/insurer preferred an appeal to the NCDRC.
According to the Hon’ble National Commission, the core question to be considered was whether the insured had knowledge of the fact that he was suffering from the pre-existing medical condition at the time of filing of the proposal form. The commission further emphasised that the onus of proving that the insured possessed suchknowledge and as such he deliberately suppressed these material facts is on the insurer. The Hon’ble Commission went on to state that the Appellant failed to prove this fact with any cogent evidence. Thus, the Hon’ble Commission while holding that the State Commission did not commit any error in judgement, also held that in case there is deliberate suppression of any material fact, this would be a clear violation of the insurance contract which is based on the principle of utmost good faith. But, the onus of proving the same is on the Appellant/insurer, who could not establish the same in the present case and therefore theHon’ble Commission rejected the appeal anddirected the insurer to pay the claim.
