In a recent case, the Bangalore District Commission directed general insurance company HDFC Ergo, to pay the claim amount to the policyholder, which it had repudiated due to non-disclosure of a pre-existing disease.

The Additional District Consumer Disputes Redressal Commission-III, Urban Bangalore, held the insurer liable for rejecting a genuine claim referring to a pre-existing medical condition, according to Live Law.

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The insurer could not provide medical evidence and substantiate the argument that the policyholder had hidden the pre-existing medical condition while buying the policy.

Reportedly, the complainant bought the health insurance policy at the suggestion of its bank, Axis Bank. His earlier policy was with the New India Assurance Company, which he switched to a family floater plan with HDFC Ergo in 2019, upon the bank’s suggestion. Next year, in 2020, the policyholder faced a medical issue and had to get hospitalised in January and February in Apollo Hospital in Bangalore.

Policyholder’s Grievance

When the policyholder filed the claim for the medical expenses, his claim was rejected, upon grounds that he had not disclosed his pre-existing diabetes mellitus issue.

The complainant paid the amount to the hospital, but approached the Commission with his grievance. The complainant argued that he did not hide anything. He did not go through a medical check-up before buying the policy because of the assurance from the insurance company that it wasn’t required.

On the other hand, the insurance company argued that the policyholder provided a declaration about his good health, and that’s why the policy was issued to him without verifying his medical history.

When the company received the claim, they got to know about his medical condition of diabetes, which existed long before the policy was issued, since 2016, and that his L4-5 disc had prolapsed from 2007. The insurer rejected the claim due to non-disclosure, and maintained termination of the policy.

The bank, which was also a party, kept to the argument that it had acted only as a facilitator, and thus should not be held liable as per Section 230 of the Indian Contract Act, 1872.

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Bangalore District Consumer Disputes Redressal Commission’s Verdict

As the insurer could not substantiate its claim with evidence or a document showing treatment of hospitalisation for heart disease, the Commission held that there is no evidence that the complainant (policyholder) hid the pre-existing disease. It observed deficiency in service and held that the insurance company was liable to pay to the complainant the medical expenses incurred (Rs 5,99,272) and also pay compensation for mental agony (Rs 20,000), and for litigation expenses (Rs 10,000).

Claim rejection in insurance is not rare, and it feels like deception when an insurance claim is rejected at the time one genuinely needs it.

So, one should be vigilant, learn about the policy benefits, coverages, exclusions, etc., read the policy document and clarify anything doubtful while buying the policy, or during the free-look period to avoid any major reasons, which the insurance company can cite to reject any claim.