Page 46 - Insurance Times November 2020

LEGAL

Vehicle Insurance

Claim denied under mother's life insur- who signs the form cannot normally disown the statements
made. Since such an allegation was neither made in the
ance policy over incorrect information complaint nor was the agent made a party to the dispute,
Raj Kumari had taken a policy of Rs 2 lakh from LIC. When the Commission rejected this argument. By its order of
she died on February 14, 2016, her son Rajesh Kumar made October 15 delivered by Justice V K Jain, the National Com-
a claim under the policy. It was rejected on the grounds mission upheld the LIC's stand and dismissed the complaint.
that false answers were given to the questions in the pro-
posal form, pre-existing ailments had been suppressed, and Supreme Court uphelds the maxim of
wrong information was furnished about the leave taken by Utmost goodfaith in disclosure of Pre
the insured.
existing diseases in proposal form.
LIC merely offered to refund the premium of Rs. 81,216.
Rajesh Kumar filed a complaint before the district forum, In a recent judgement the Supreme court while setting
which ordered the claim to be paid. LIC's appeal to the aside the verdict of the National Consumer Disputes
Himachal Pradesh State Commission was also dismissed. LIC Redressal Commission said the contract of insurance is of
then went in revision before the National Commission, ar- "utmost good faith" and a proposer who seeks to obtain
guing that orders were passed without considering the life insurance policy is duty bound to disclose all material
evidence produced by it. facts bearing upon the issue. The apex court said this while
setting aside the March this year verdict of the National
LIC relied on the previous treatment record and leave cer- Consumer Disputes Redressal Commission (NCDRC) which
tificates which showed Raj Kumari was suffering from rheu-
had dismissed the plea of an insurance firm against the
matic heart disease, diabetes and hypertension since 2010, order asking it to pay full death claim along with interest
but she had suppressed these ailments in the proposal form
to the mother of the deceased.
submitted on March 4, 2013 by intentionally giving false
answers. A bench headed by Justice D Y Chandrachud noted that the
proposal form requires a specific disclosure of pre-existing
Rajesh Kumar contended that LIC's panel doctor had exam- ailments, so as to enable the insurer to arrive at a consid-
ined his mother prior to issuance of the policy and had found ered decision based on the actuarial risk. "A contract of
her to be in good health. The National Commission rejected insurance is one of utmost good faith. A proposer who seeks
this argument, observing it may not be possible to detect to obtain a policy of life insurance is duty bound to disclose
all ailments during a clinical examination and tests con- all material facts bearing upon the issue as to whether the
ducted at that time, especially when the documentary evi- insurer would consider it appropriate to assume the risk
dence clearly established that treatment had been sought which is proposed," said the bench, also comprising Justices
for pre-existing ailments, and that her leave record at work Indu Malhotra and Indira Banerjee. The bench delivered its
coincided with her hospitalization. The Commission pointed judgement on an appeal filed by insurance firm against the
out that the insured had failed in her duty to disclose rel- NCDRC's verdict which had rejected its plea against the
evant information by truthfully answering the questions in state's CDRC order in the matter.
the proposal form.
While setting aside the NCDRC's order, the bench noted the
Rajesh Kumar tried to argue that the form had been filled proposer had failed to disclose that he was suffering from
in by the agent without consulting the proposer, in this case preexisting illness and also about vomiting of blood which
Raj Kumari herself. The Commission held that a proposer had taken place barely a month prior to the issuance of

46 The Insurance Times, November 2020