An applicant seeking a life insurance policy is required to disclose all the facts, the Supreme Court said.
New Delhi:
An insurance contract is in the utmost good faith and an applicant seeking a life insurance policy is required to disclose all material facts relating to the matter, the Supreme Court said.
The high court said this by overturning the verdict in March this year from the National Consumer Disputes Reparation Commission (NCDRC) which dismissed an insurance company’s plea against the order asking it to pay. the entire death claim as well as interest to the mother of the deceased.
A bench led by Judge DY Chandrachud noted that the proposal form requires specific disclosure of pre-existing conditions, in order to allow the insurer to make a considered decision based on actuarial risk.
An insurance contract is one of the greatest good faith. An applicant seeking a life insurance policy is required to disclose all material facts relating to whether the insurer would deem it appropriate to assume the risk that is proposed, the bench said, also including Judges Indu Malhotra and Indira Banerjee.
The bench delivered judgment on an appeal by the insurance company against the verdict of the NCDRC which dismissed its plea against the state’s CDRC order in the matter.
While setting aside the NCDRC’s order, the judiciary noted that the applicant had not disclosed that he suffered from a pre-existing condition and also from vomiting blood that had only occurred a month before the policy was released.
The investigation conducted by the insurer indicated that the insured suffered from a pre-existing illness, resulting from alcohol abuse and that the facts of which the applicant was aware had not been disclosed, he said. .
We are therefore of the opinion that the judgment of the NCDRC in the present case does not set out the correct legal principle and should be set aside. We are ordering accordingly, he said.
The lawyer who appeared for the insurance company informed the higher court that during the proceedings, the entire claim had been paid to the attorney, except for the amount of costs.
In view of the respondent’s age (mother of the deceased), aged seventy and the death of the insured on whom she was likely to depend, we are of the opinion that it would be appropriate for this court uses its jurisdiction under article 142 of the constitution, ordering that no recovery of the amount paid be made from the defendant, he said.
In August 2014, a proposal for an insurance policy was submitted by the man and the form contained questions relating to his health, medical history and required specific disclosure as to whether he had undergone any illness, hospitalization or treatment.
The proponent answered these questions in the negative, indicating that he had not undergone any medical treatment or hospitalization and was not suffering from any illness.
Based on the information provided by the man, an insurance policy was issued. Later in September 2014, he passed away as a result of which a claim was filed.
During an independent investigation, hospital treatment records were obtained and he revealed that he had hepatitis C.
The insurance company dismissed the claim in May 2015 due to non-disclosure of material facts.
The candidate had initiated consumer compliance proceedings before the district consumer dispute redress forum which ordered the insurance company to pay the entire death claim with interest.
The appeal against the order was dismissed by the National Consumer Dispute Resolution Commission and later the NCDRC also dismissed the insurance company’s plea.
(Except for the title, this story was not edited by GalacticGaming staff and is posted from a syndicated feed.)
