[Insurance] Failure to Disclose Material Facts in Policy, Will Disentitle for Claim: SC

Recently the Supreme Court has held that if the Proposer fails to disclose about his diseases in Insurance Policy form. Then he will not be entitled to claim any amount under the Policy.

Insurance Form Should Filled Carefully

The proposer had submitted a proposal to get an insurance policy in the name of his mother.

There were multiple questions in the form asking if the proposer had any previous health conditions. 

However proposer answered all the questions in the negative. Meaning the proposer did not have any history of the disease and was in good health.

Based on the answers of the proposer, the insurance company issued a policy of insurance on 12.08.2014.

The proposer, Kulwant Singh died on 12.09.2010 and subsequently a claim was lodged with the insurance company.

During an independent investigation, it was found that Kulwant Singh was suffering from Hepatitis C.

Also at the time of his hospitalization, he had a stomach ailment due to which he passed away.

Due to the non-disclosure of material facts, the insurance claim filed by the proposer was rejected.

Aggrieved, the proposer approached the SCDRC where his complaint was allowed, and the appellants were directed to pay the full claim amount.

A revision was filed before the NCDRC, which was also rejected. The NCDRC held that a disease has to be distinguishable from a mere illness. 

It was further observed that the death occurred due to natural causes, and there was no relation between the cause of death and non-disclosure of disease.

A cost of Rs. 2 lakhs was also imposed on the insurance company.

The order passed by the NCDRC was challenged before the Supreme Court.

Proceeding before the Court:-

Learned Counsel for the appellants argued that there was clear evidence that the petitioner was suffering from a disease when the insurance policy was bought.

It was further argued that the proposer did not disclose material facts about the health of the insured and therefore, cannot claim the insurance amount.

Counsel for the respondent refuted the claims of the appellants and stated that the order passed NCDRC was correct. 

He stated that there was no nexus between the cause of death and the alleged non-disclosure in the instant case.

Proposer Should Disclose Everything:-

The Supreme Court observed that the deceased was suffering from a severe pre-existing condition which was not disclosed to the insurer.

It was further observed that in the policy document, specifically Column No.22, where there were questions regarding hospitalization, ailments and treatments, the proposer did not mention information related to the disease.

The Hon’ble Supreme Court held that because the proposer did not disclose material facts about health, the order passed by the NCDRC should be set aside.

Considering the age of the nominee who was around 70 years, the Supreme Court directed that no recoveries should be made from her.

Case Details:-

Title: Bajaj Allianz Life Insurance vs Dalbir Kaur

Case No. Civil Appeal No. 3397 of 2020

Date of Order: 09.10.2020

Coram: Hon’ble Justice Dr D.Y Chandrachud, Hon’ble Justice Indu Malhotra and Hon’ble Justice Indira Banerjee

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