Order Name: State Consumer Disputes Redressal Commission, Bihar vs TATA AIG Life Insurance Company
In a recent judgment by the State Consumer Disputes Redressal Commission, Bihar, headed by Justice Sanjay Kumar, with members Shamim Akhtar and Ram Prawesh Das, an earlier decision by the District Commission, Vaishali was upheld. The case revolved around TATA AIG Life Insurance Company, which was judged to have wrongly refused a legitimate claim from the complainant due to the non-disclosure of a chronic disease while filling out the proposal form. The State Commission emphasized that a pre-existing illness, hidden at the time of proposal, cannot disqualify a beneficiary from receiving insurance benefits unless it directly led to or was the cause of the death.
To give you a quick rundown of the case: Awadhesh Kumar Nirala, the complainant, filed a claim against TATA AIG Life Insurance Company after his father, Surya Narayan Shah, passed away. His father had two life insurance policies from TATA AIG Life Insurance, summing up to a total of Rs. 10,75,000. However, this claim was rejected by the insurance company, citing the non-disclosure of a pre-existing chronic asthma condition.
Feeling unjustly treated, the complainant took the matter to the District Consumer Disputes Redressal Commission, Vaishali, Bihar. Here, the court reviewed the death certificate provided by the treating doctor and concluded that the cause of death was a severe cold, not the undisclosed ailment. Consequently, the District Commission ordered the insurance company to pay the sum of Rs. 10,75,000 to the complainant. Unhappy with the decision, the insurance company appealed to the State Consumer Disputes Redressal Commission, Bihar.
The State Commission, in its evaluation, referred to an earlier case – Life Insurance Corporation of India vs Sunita and Ors. The judgment in this case held that non-disclosure of a pre-existing disease could not disqualify a person from obtaining insurance benefits unless it directly led to or caused death. Applying this logic to the present case, the State Commission agreed with the District Commission’s decision. They noted that while the deceased did not disclose his chronic asthma in the insurance proposal, the cause of death (a severe cold) was not directly linked to this undisclosed condition.
In conclusion, the State Commission upheld the District Commission’s decision, praising it as well-reasoned and properly examined. The appeal by the insurance company was dismissed, although the interest rate was reduced from 15% to 8% per annum from the date of the complaint’s filing until its final settlement.
This case brings to light the significance of the cause of death in insurance claims and serves as a reminder that non-disclosure of a pre-existing condition cannot be a ground for denying insurance benefits unless it directly leads to or causes death.
