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DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION
J.D. Kapoor, President and Rumnita Mittal, Member
TILAK RAJ - Appellant
Versus
NATIONAL INSURANCE COMPANY LIMITED - Respondent
Appeal No. 68 of 2003
Decided on : 10-01-2008
In the case of a renewed policy, the insured is not required to disclose a pre-existing disease already known to the insurance company.
Headnote:
Insurance - Medi-claim Policy - Non-disclosure of Pre-existing Disease
Fact of the Case:
The appellant's claim against a medi-claim policy was repudiated by the respondent for non-disclosure of a pre-existing disease. The District Forum dismissed the complaint, but the appellant appealed.
Finding of the Court:
The court found that the appellant had a renewed policy and had already been treated for the disease during the subsistence of the renewed policy. The court allowed the appeal, set aside the impugned order, and directed the respondent to make payment of Rs. 41,000, along with compensation for mental agony and harassment, and the cost of litigation.
Issues: Non-disclosure of pre-existing disease, renewal of the policy, reimbursement of expenses, and the duty of good faith in an insurance contract.
Ratio Decidendi: The court emphasized that a contract of insurance is a contract of good faith, and the insured is expected to disclose all facts and information. In the case of a renewed policy, the insured is not supposed to disclose a fact already known to the insurance company. The court also highlighted the common practice of obtaining signatures on blank forms and the difficulty in understanding insurance policy terms and conditions.
Final Decision: The appeal was allowed, the impugned order was set aside, and the respondent was directed to make the specified payments within one month. Any bank guarantee or FDR furnished by the appellant was to be returned.
ORDER
J.D. Kapoor, President (Oral)- The claim of the appellant against medi-claim policy was repudiated by the respondent for non-disclosure of pre-existing disease, consequently the appellant filed instant complaint before District Forum.
2. Vide impugned order dated 8.11.2002, the District Forum dismissed the complaint of the appellant by accepting the version of the respondent that the appellant has not disclosed that a year before he was suffering from same disease and was admitted in the hospital.
3. Feeling aggrieved the appellant has preferred this appeal.
4. We have perused the impugned order closely and find that the first policy was taken in the year 1993, which was valid for a period of one year w.e.f. 21.10.1993 to 20.10.1994. Admittedly the appellant had taken claim against the policy for Rs. 13,518 for the treatment of Pseudo Pancreatic Cyst. After expiry of the said policy another renewed policy was issued by the respondent, which was valid from 13.2.1995 to 12.2.1996. However the appellant again felt some pain and got ultra sound of the abdomen done on 4.5.1995, and again a large cyst of size 12.4 X 8.2. cms was found over the tail and body of the pancreas, for which he was treated and discharged from the hospital on 22.5.1995 after treatment and discharge summary was issued which is dated 22.5.1995, which clearly shows that he was admitted one year back with the Pseudo-Pancreatic Cysts .
5. It is contended by the Counsel for the appellant that the proposal form was filled up by the agent of the Insurance Company and it was well within the knowledge of the respondent company while renewing the policy that the appellant has already availed the benefit of the policy in the previous year and therefore, the question of concealing this fact did not arise as it was case of renewal of the policy and not a new policy at all.
6. Contract of insurance is contract of good faith and that is why insured is expected to disclose all the facts and information as sought by the insured through proposal form.
7. In the instant case the appellant had taken the policy a year before and was reimbursed expenses of Rs. 13,518 for treatment of the Pseudo-pancreatic Cyst and the Insurance Company issued the renewed policy knowing well that the appellant had already been treated for the disease. Once a person has undergone treatment for disease and the policy is renewed he is not supposed to disclose the fact which is already in the knowledge of the Insurance Company. The Insurance Company should have verified from the earlier policy as it had already reimbursed the expenses incurred by the appellant and to treat such a disease for which he has already been treated and reimbursed as pre-existing disease does not stand to reason.
8. Had it been a case of new policy altogether the Insurance Company was justified in repudiating the claim as we have taken a view that if the insured conceals any factum of his having been hospitalized or undergone operation in the near proximity of obtaining the policy say a year or two before as he knows the name of the disease for which he was hospitalised or treated, he is not entitled for reimbursement of the expenses against medi-claim policy.
9. We cannot be oblivious of the fact that it is common knowledge that the Insurance Companies appoint agents and sub agents in various cities for augmenting their business, in order to save their administrative expenses and it is also common knowledge that the Insurance Companies produce a bunch of papers containing large number of terms and conditions in micro print and in many cases, illiterate and uneducated or semi literate consumer who can not even read the terms and conditions of the insurance policy which are invariably written in English language or its Hindi version which is not easily understandable even to an educated person. General practice is to obtain the signature on the blank form by marking the places where signatures of the insured are required.
10. P
