No insurance claim if existing ailments concealed: NCDRC

The National Consumer Disputes Redressal Commission (NCDRC) gave the ruling while setting aside a Himachal Pradesh State Consumer Commission judgement which had directed the LIC to pay Rs 50,000 as insurance claim to the kin of a policy holder, who died of tuberculosis in 2001.

Allowing the appeal by LIC, the NCDRC said there was credible evidence that the policy holder was suffering from tuberculosis and he had concealed it from the company, thus entitling the insurer to deny him the claim.

"Since, an insurance is a contract entered between the parties in utmost good faith, suppression of any material facts by the insuree, as was done in this case, entitled the insurance company to repudiate the claim as per the terms and conditions of the policy," an NCDRC bench, headed by Justice Ashok Bhan said.

"We, therefore, find merit in the revision petition and allow the same. The orders of the fora below are set aside," the bench said.

The state commission, had directed the LIC to pay the claim amount along with a litigation cost of Rs 1,000 to the petitioner, Shakuntala Devi, wife of the policy holder.=
Devi had told the state consumer forum that her husband had taken a policy worth Rs 50,000 in 1999 and its premium was regularly paid by him, but it lapsed in September 2001 because the authorised LIC agent failed to deposit the money to the insurance company.

The insuree was declared a defaulter for no fault of his and on his death on November 26, 2001, the claim filed by her was repudiated on flimsy grounds, she had told the state commission.

The LIC, in its appeal before NCDRC, had accepted the same but added the policy was revived on 16 November, 2001, ten days before his death, on a representation by the policy-holder.

While seeking revival of the policy, the policy-holder, however, did not disclose to the LIC that he was suffering from tuberculosis and was undergoing treatment for it, the LIC added in its appeal.

The NCDRC, in an ex-parte order, accepted LIC's appeal saying the revival of policy amounts to a new contract and the fact that the policy holder was not in good health should have been disclosed.

"We also agree with the counsel for petitioner (LIC) that there is adequate credible evidence on record that the respondent's husband was suffering from tuberculosis and that he had suppressed this material fact," it said