Case Title: Narendra Vs. Life Corporation of India
Case Number: R.P. No. 183/2022
The National Consumer Disputes Redressal Commission (NCDRC), led by Dr. Inder Jit Singh, recently ruled on a case involving an insurance policy claim. The key takeaway of the ruling was that anyone applying for an insurance policy must be completely upfront about all relevant details that could affect the risk assessment.
Let’s look at the details of the case. The person who lodged the complaint had been named as the beneficiary of three insurance policies taken out by his uncle from Life Corporation India. Upon the uncle’s death, claims were filed for all three policies. The insurance company honored the claims for the first two policies, but denied the claim for the third policy. The reason: the uncle had not mentioned the existence of the second policy when he applied for the third one.
The complainant took the matter to the District Forum, but they sided with the insurance company. An appeal to the State Commission also ended in disappointment for the complainant. Not willing to give up, the complainant then filed a revision petition with the NCDRC.
In defense of its actions, Life Corporation India stated that the uncle’s failure to disclose the second policy was a material omission. They contended that if they had been aware of the second policy, they would have conducted a more detailed investigation before issuing the third policy. The insurer stressed that the lack of transparency rendered the third policy invalid, a viewpoint supported by both the District Forum and the State Commission.
The NCDRC, in its examination of the case, noted that the lower forums had reached the same conclusion. There was no dispute that the uncle had not disclosed the second policy when applying for the third. This was a crucial point, according to the Supreme Court decisions in the cases of Reliance Life Insurance vs. Rekha Ben Nareshbhai Rathod and Manmohan Nanda vs. United India Assurance Company Limited and Another. These cases established that insurance contracts are based on the principle of full disclosure, with the applicant required to reveal all facts concerning the risk involved.
In conclusion, the NCDRC underscored that the importance of specific information depends on whether the applicant knew, or should have known, its significance. In this case, the undisclosed second policy was indeed significant. Had the uncle fully disclosed his insurance coverage, it might have affected the insurer’s decision to issue the third policy. Therefore, the NCDRC dismissed the revision petition.
This case highlights the importance of transparency when applying for insurance. An omission or false information can lead to the denial of a claim, even if it results in a financial loss for the policyholder or their beneficiaries.
