IMPORTANT POINT
Insurance – Repudiation of death claim – If insured had not been found to be medically deficient as on date of proposal form then question of any allegation about past disease has to be viewed accordingly.

ORDER

A.P.Sahi, President—The State Commission of Karnataka has allowed CC No.402 of 2018 filed by the respondent/complainant holding that the appellant insurance company was deficient in its services by not reimbursing the claim of the complainant. The deceased husband of the complainant late Mr. Veeresh aged about 49 years had acquired a Max Life Insurance Policy on 10.12.2014. He fell ill in the month of October, 2016 and he died on 26.10.2016 due to aspiration problems as reported. The respondent/complainant, being the nominee and widow of Mr Veeresh, requested for the reimbursement for the risk covered under the said policy, but the same was repudiated vide letter dated 31.03.2017, on the ground that the policy had lapsed due to non- payment of renewal premium by the due date.

2. The complainant protested against the same that the payments had already been made and therefore, the policy had not lapsed with the grace period available and therefore the claim deserved to be reconsidered. The insurance Company took up the matter and vide letter dated 22.05.2017 intimated the complainant that her claim has been admitted for an evaluation.

3. On 27.06.2017 the final repudiation letter stated an all together different reason of non- disclosure of material facts about the pre-existing diseases of the insured and on that ground the claim was finally repudiated. The letter repudiating the claim dated 27.07.2017 is extracted herein as under:—

Dear

Mr. Amaramma Veeresh,

Subject Claim Reference Number (201635801022),

Policy Number (258122704).

This is with reference to the captioned death claims. The proposal form was received by us at our branch office on 12 Dec. 2014 and policy was issued on 20 Jan. 2015.

We refer to the proposal form wherein, late Mr. Veeresh had given a declaration, that he had made complete, true and accurate disclosure of all the facts and circumstances as may be relevant for the acceptability of the proposal form. However, the following questions in the proposal form have been answered as ‘NO’ Ques-3) have you ever been investigated, treated or diagnosed with any of the following conditions. If yes, please provide details including doctor’s name and dates (or attach relevant questionnaire).

x) Epilepsy, nervous disorder, multiple sclerosis, tremors, numbness, double vision, paralysis, depression or psychiatric disorders.

However, as per medical records received dated 04 MAR 2014, LA was diagnosed with bibrachial amyotrophy and neuralgic amyotrophy (a condition where in there is extreme weakness of upper limbs with thinning, which was increasing 10 percent every month), which is prior to signing proposal form, Therefore, it is evident that medical disclosure as required in the proposal form was not made by late Mr. Veeresh. At the stage of underwriting, had the above stated facts been disclosed to us, the captioned policy would not have been issued.

In the light of above Information, we are declining the death claim against the above mentioned policy for reasons of material medical non-disclosure by late Mr. Veeresh.

We wish to draw your attention to the following clause of the Policy Terms and Conditions-

10.4 Full Disclosure and incontestability

10.4.1 Insurance is contract of utmost good faith and we rely and trust upon your representations. This policy has been underwritten and issued by us based on the information provided by you in/with the proposal form, In case of any concealment, non disclosure or fraud or misrepresentation, we shall cancel the policy immediately by paying the surrender value. if any subject to such concealment, non disclosure, fraud or misrepresentation being established by us in accordance with section 45 of the Insurance Act.

Further, in view of the Insurance Laws (Amendment) Act. 2015, Section 45 (4). Provided further that in case of repudiation of the policy on the ground of misstatement or suppression of a material fact, and not on the ground of fraud, the premiums coll