Tribune News Service
Saurabh Malik
Chandigarh, November 19
The Punjab and Haryana High Court has ruled that an insurance company ought not to rescind a claim in case it chose not to subject the insured to medical examination before issuing the policy.
This was because it had the option to satisfy itself about the medical and health conditions of an insured, and not to rely on his declaration. The Bench also made it clear that a claim could not be rejected on the ground of suppression of material information regarding health condition when the death was due to unrelated reasons.
Liable to pay
- High Court says claim can’t be rejected on the ground of suppression of information
- After exercising commercial prudence, the company can’t be allowed to escape liability
- Insured person was admitted to hospital about four months prior to obtaining the policy
“Having exercised its commercial prudence, it should not be permitted to escape its liability. Once it chose to not subject the proposer to medical examination, it can be safely assumed that such information was not grossly material to its decision or that the cost of medical examination to ascertain the health condition was not worth the risk to be covered,” the Bench asserted.
Justice Vinod S Bhardwaj further asserted that a conscious decision was deemed to be taken by the insurance company in both the set of circumstances. Having chosen to waive off its right to seek medical examination, it could not be allowed to claim protection of alleged suppression in all sundry eventualities.
The question for adjudication before Justice Bhardwaj’s Bench was whether an insurance company would be entitled to repudiate an insurance claim on the grounds of suppression of material information regarding health condition when death in question was wholly unrelated to it and was an outcome of motor vehicular accident.
Justice Bhardwaj’s Bench was told that the insured died in an accident in May 2013. The insurance company’s stand, however, was that a dependent was disentitled to the claim following concealment of material information. It was submitted that the insured was admitted to a hospital about four months prior to obtaining policy with diagnosis of accelerated hypertension and did not disclose the fact of his coronary angiography.
Justice Bhardwaj asserted that information could be categorised as “relevant” and “material”. Every information having connect or relation with the policy document could be classified as relevant. Material meant all essential information integral to the decision of assuming the risk.
Referring to a Supreme Court judgment, Justice Bhardwaj asserted it accepted the principle that a claim ought not to be rescinded when the death had no nexus to the information concealed. Information on health was intended to assess loss of life due to disease, not unrelated cause. The company had the right to seek details regarding medical condition from its empanelled doctors.
“As a prudent insurer, it ought to have sought verification of all health related claims from its empanelled doctors, if all such facts were considered “material” for its decision making,” the court said. The claim awarded to the victim’s kin was also upheld.
