Case Title: Bajaj Allianz Life Insurance Co. Ltd Vs. Bharti Mahaveer Jain
Case Number: F.A. No. 614/2020
In a recent ruling, the National Consumer Disputes Redressal Commission, led by Subhash Chandra and Sadhna Shanker, stated that if an insurer does not clearly explain the exclusion clause to the policyholder, the clause cannot be enforced.
Here’s a rundown of the case: Bharti Mahaveer Jain took out two home loans with Bajaj Allianz Life Insurance for amounts of ₹28,95,000 and ₹48,60,000. Along with these loans, she received an insurance policy. A Certificate of Insurance (COI) was given to her, listing her as part of a Group Insurance Scheme with a sum assured of ₹71,49,174. Jain became critically ill, and despite informing the insurance company, her claim was denied due to policy terms. Jain took the matter to the State Commission, who directed the insurer to refund the loan installments with interest, cover medical expenses, and provide compensation for mental agony. Unsatisfied with the decision, the insurer appealed to the National Commission.
The insurer argued that the State Commission didn’t correctly interpret the policy terms. They stated that the insurance policy is a binding contract, and the terms should be strictly adhered to. They also mentioned a 15-day Free Look Period, during which Jain made no request for cancellation, thus solidifying the policy. The insurer further claimed that they rightfully denied Jain’s claim under Clause 15(iii)(a) of the Master Policy, which does not cover critical illnesses within 180 days from the risk date.
However, the Commission found that the insurer had no authority to issue Jain’s insurance certificate under the Master Insurance Policy, as it was already withdrawn. Jain argued that the Master Policy was invalid, and the real contract was the Certificate of Insurance issued to her. She also contended that the insurer had acted unfairly, citing a lack of a waiting period exclusion clause in her policy and the insurer’s history of regulatory violations.
The crux of the issue was whether Jain’s critical illness treatment was covered under her policy. The State Commission had found that the insurer did not adequately communicate the policy’s terms and conditions to Jain, making the exclusion clause non-binding. As a result, the insurer was instructed to pay the insured sum before the policy’s maturity date.
While the insurer wanted strict adherence to the policy terms, Jain argued that the non-disclosure was a service deficiency. The National Commission agreed with Jain, stating that the insurer’s failure to communicate the exclusion clause made it unenforceable. While they agreed with the State Commission on the insurance cover issue, they disagreed on the loan repayment issue, stating it was not part of the insurance policy. The Commission set aside the order for refunding loan installments but directed the insurer to pay Jain’s medical expenses and compensation under the policy. They also upheld the award for Rs. 25,000 for mental agony and Rs. 15,000 for litigation costs.
In conclusion, the key takeaway from this judgment is the importance of clear communication between insurers and policyholders. Without comprehensive understanding and agreement on policy terms, insurers cannot enforce exclusion clauses. This case reinforces the importance of transparency and open communication in the insurance industry.
