Corona Rakshak Policy: Insurer Can't Deny Claim Based on 'Mild' COVID If Not An Explicit Policy Condition: Rajasthan State Consumer Commission - 2025-05-06

Insurer Cannot Deny ‘Corona Rakshak’ Claim Based on COVID Severity if Not a Policy Condition, Holds Rajasthan State Consumer Commission

Bikaner, Rajasthan - The Rajasthan State Consumer Disputes Redressal Commission, Circuit Bench at Bikaner, has delivered a significant ruling affirming that an insurance company cannot reject a claim under the ‘Corona Rakshak Policy’ by classifying the policyholder’s illness as "mild," so long as the policy conditions of a positive diagnosis and hospitalization for over 72 hours on a doctor’s advice are met.

The bench, comprising Judicial Members Ms. Urmila Verma and Mr. Nirmal Singh Medatwal, dismissed a batch of 13 appeals filed by The Oriental Insurance Company Ltd. against orders of the District Consumer Commission. The State Commission upheld the District Commission's decision to grant the full insured sum of ₹2,50,000 to the policyholders, but struck down certain adverse remarks made against the insurer.

Case Background

The appeals arose from a series of complaints where individuals, who had purchased the ‘Corona Rakshak Policy’ in 2020, had their claims repudiated by The Oriental Insurance Company. The complainants, including Mr. Amit Panchariya in a representative case (Appeal No. A/209/2022), tested positive for COVID-19 and were hospitalized for more than 72 hours upon medical advice.

After their recovery, they filed for the lump-sum benefit of ₹2,50,000 as per the policy. However, the insurance company rejected the claims.

Arguments of the Parties

The Oriental Insurance Company (Appellant): The insurer argued that the hospitalizations were not medically necessary. Citing the Ministry of Health and Family Welfare's Clinical Management Protocol for Covid-19 (Version 6, issued May 24, 2021), the company contended that the policyholders had only "mild" symptoms and could have been treated at home. It asserted that the admissions were primarily for isolation or quarantine purposes, which does not qualify as "hospitalization" under the policy terms. The company further argued that there was no "active line of treatment" and the patients’ oxygen saturation levels remained normal.

The Policyholders (Respondents): The complainants countered that they were hospitalized for over the mandatory 72-hour period based on the professional advice of a qualified physician, a key requirement of the policy's operative clause. They argued that the government guidelines cited by the insurer were issued in May 2021, long after they had purchased their policies in 2020, and thus could not be applied retrospectively. Furthermore, they contended that these guidelines were for hospitals, not to be used by insurers to deny legitimate claims.

Commission's Analysis and Ruling

The State Commission meticulously examined the policy's operative clause, which stipulated four conditions for a claim to be payable: 1. The insured must be diagnosed with COVID-19. 2. The insured must be hospitalized for a continuous period of 72 hours. 3. The hospitalization must be on the advice of a qualified medical practitioner. 4. The treatment must adhere to government-prescribed guidelines.

The Commission made the following key observations:

"When the insurance company itself accepts that the complainants had mild COVID, it is nowhere mentioned in the operative clause of the policy that the company will not be liable to pay the claim in case of mild COVID-19."

The bench found no evidence to suggest the hospitalizations were fraudulent or solely for claiming insurance money. It emphasized that the decision to hospitalize was made by a medical professional based on the prevailing circumstances of the pandemic.

"In the given circumstances at that time, the doctor deemed it appropriate to hospitalize the complainants and advised admission. This advice cannot be deemed incorrect based on the submitted medical documents, even if the complainants' condition was stable at the time of discharge."

The Commission noted that the company’s own repudiation letter cited Clause 6.1 (Exclusion for diagnostic/evaluation purposes), but the evidence showed patients were admitted after a positive diagnosis, rendering this clause inapplicable.

Final Order

While upholding the District Commission's order directing the insurer to pay the claim amount and compensation, the State Commission set aside certain remarks made in the lower forum's judgment. It disagreed with the findings that the insurer had engaged in unfair trade practices by misleading consumers or that unsigned policy terms were not binding.

Ultimately, all 13 appeals filed by The Oriental Insurance Company were dismissed, and the orders to compensate the policyholders were confirmed. The parties were directed to bear their own costs for the appeal.