Insurance Claims: The Supreme Court recently gave a very important decision related to insurance. It clarified that if the policyholder hides any information, his claim can be rejected. In particular, hiding one’s drinking habits can lead to the insurance claim being rejected, even if the cause of death is not related to alcohol.
What is the whole matter of insurance claim
The case pertains to a man who had bought a ‘Jeevan Arogya’ policy from the Life Insurance Corporation of India (LIC) in 2013. While filling the application, he had not disclosed that he had been drinking excessively for a long time. Within a year of buying the insurance, he was admitted to a hospital in Jhajjar, Haryana due to severe stomach pain. After a month of treatment, he suffered a heart attack and died.
Insurance claim filed
His wife filed an insurance claim for the medical expenses, but LIC rejected it saying that the deceased had concealed information about his alcohol habit. The insurance company argued that their policy clearly did not cover illnesses caused by a person’s own habits, behaviour or negligence. This also included illnesses caused by excessive alcohol consumption.
Consumer Forum ruled in favour of wife
Initially, the District Consumer Forum ruled in favour of the deceased’s wife. It ordered LIC to pay Rs 5.21 lakh. The state and national consumer commissions also upheld the decision, saying that the death was due to a heart attack and not any liver-related disease. However, LIC challenged this decision in the Supreme Court.
Supreme Court gave verdict in favor of LIC
The bench of Supreme Court Justice Vikram Nath and Sandeep Mehta overturned the decisions of the consumer commissions and gave the verdict in favor of LIC. The court said that this was not an ordinary insurance policy, Rather, it was a specialized health insurance plan with strict rules. The Supreme Court also clarified that “diseases caused by alcohol do not occur overnight.” The deceased had been consuming alcohol for a long time, and he had concealed this fact and given false information. This was the reason why LIC was justified in rejecting the claim. However, keeping in mind the financial condition of the widow, the court did not order the return of the Rs 3 lakh already received by her.