Case Title: Aviva Life Insurance Co. India Ltd. Vs. Kariyappa
Case Number: F.A. No. 355/2017
In a recent judgment, the National Consumer Disputes Redressal Commission, led by Mr. Subhash Chandra and Dr. Sadhna Shanker, ruled in favor of Aviva Life Insurance. The Commission established that it is a policyholder’s responsibility to provide complete and truthful information when obtaining an insurance policy, regardless of whether they deem it important or not.
Here’s a rundown of the case’s details:
The complainant’s son had purchased a life insurance policy from Aviva Life Insurance for a sum of ₹30,00,000, paying an annual premium of ₹12,566 for 30 years. After the unfortunate demise of the policyholder due to a heart attack, the insurance claim was rejected by Aviva. They cited undisclosed pre-existing Chronic Kidney Disease as the reason for rejection.
Consequently, the complainant took the matter to the State Commission, demanding the insurer to pay the policy amount of ₹30,00,000 with an additional compensation for mental distress and service deficiency, which summed up to ₹34,10,000. They also demanded 12% interest per annum. The State Commission ruled in favor of the complainant, which led Aviva to approach the National Commission.
Aviva argued that the policyholder had deliberately concealed critical health information while applying for the policy. They provided evidence of the policyholder being hospitalized due to breathlessness and being treated for Chronic Kidney Disease. The insurance company contended that they had accepted the insurance proposal in good faith and requested the complaint to be dismissed.
The National Commission, after careful consideration, referred to previous rulings to clarify the principle of utmost good faith in insurance agreements. They stressed that a policyholder must provide full and honest information while applying for insurance, irrespective of their personal judgment about its relevance.
The Commission pointed out that withholding any significant information can influence the insurer’s decision to provide coverage or not. They also clarified that even if the undisclosed information isn’t directly related to the cause of death, it’s a policyholder’s duty to reveal all known material facts when buying a policy.
The Commission concluded that Aviva Life Insurance was justified in denying the claim due to the concealment of important facts by the policyholder. As a result, the National Commission overruled the State Commission’s decision and validated Aviva’s appeal.
This ruling underscores the importance of complete transparency when applying for an insurance policy. Remember, withholding vital information, regardless of its apparent relevance, can lead to claim rejection.
