Mere Suspicion Of Income Misstatement Not Enough To Reject Insurance Claim: Kurnool Commission
The District Consumer Disputes Redressal Commission, Kurnool, comprising President Sri Karanam Kishore Kumar and Members Sri N. Narayana Reddy and Smt. S. Nazima Kausar, has held HDFC ERGO General Insurance Company Limited liable for deficiency in service after it unjustifiably repudiated a ₹1 crore accidental death insurance claim on the ground of alleged income suppression, and directed the insurer to pay the assured amount with interest and compensation.
Facts:
The complainant's husband, the late Gandla Mulaiah, owner of a stone factory at Banaganapalli, had obtained a Koti Suraksha Policy from HDFC ERGO General Insurance Company with a sum assured of ₹1 crore. The policy was valid from March 2024 to March 2027, with his wife, Smt. Gandla Prameela (complainant) , as the nominee.
On 28 July 2025, Mulaiah was hit by a mini-truck while standing by the roadside. He sustained serious injuries and was declared dead at Government General Hospital, Nandyal. A criminal case was registered and the police subsequently filed a charge sheet.
Following his death, the complainant submitted a claim for the ₹1 crore accidental death benefit. However, HDFC ERGO repudiated the claim on 23 October 2025, alleging that the deceased had suppressed or inflated his income particulars while obtaining the policy.
The complainant challenged the repudiation, contending that there was no deliberate suppression of material facts and that the insurer had already scrutinised and accepted the proposal. The insurer maintained that its investigation had revealed material misrepresentation in the income declared by the deceased.
Contentions of the Insurance company:
HDFC ERGO contended that the claim was rightly repudiated after investigation revealed material misrepresentation of the insured's income. It alleged that the deceased had intentionally inflated his income to qualify for the policy and relied on the investigation report, bank statements and statements attributed to his son. The insurer also relied on the policy's fraud and false-declaration clause and argued that there was no deficiency in service on its part.
Observation and decision:
The Commission observed that the policy, accidental death and nominee status were undisputed. The FIR, post-mortem report, inquest report, charge sheet and death certificate established the accident and death.
The Commission held that the insurer had to prove that the income was knowingly and deliberately inflated and was material to the policy. The investigation report and the alleged statement of the deceased's son were insufficient to prove deliberate misrepresentation.
The Commission further held that the fraud/false-declaration clause could not be invoked merely on suspicion. As deliberate misrepresentation was not proved, the repudiation dated 23 October 2025 was held unjustified and amounted to deficiency in service.
The complaint was partly allowed. HDFC ERGO was directed to pay ₹1 crore, along with 9% interest per annum from 4 November 2025 until realization, ₹25,000 as compensation for mental agony, and ₹10,000 towards litigation costs, within 45 days of receiving the order.
Case No.: Consumer Complaint No. 173/2025
Case Title: Smt. Gandla Prameela v. HDFC ERGO General Insurance Company Limited
Appearances:
For Complainant: Sri P.Siva Sudarshan, Advocate
For Respondent: Sri Palle Niranjan Kumar, Advocate