Can't Repudiate Claim Based On Clauses Not Supplied To Insured, North Delhi District Commission Holds National Insurance Co. Liable

Brief Facts:

Mr. Dharamveer Verma (“Complainant”) procured a Parivar Mediclaim Policy with a sum insured of Rs. 2,00,000/- through the authorized agent of the National Insurance Co. Ltd. (“Insurance Company”). Subsequently, the Complainant suffered a Cardiac Arrest and was admitted to Apollo Hospital, New Delhi, where a total bill of Rs. 2,13,080/- was incurred, of which Rs. 1,00,000/- was directly paid by the insurance company to the hospital. The Complainant, upon discharge, paid the remaining balance. When the Complainant submitted the documents for reimbursement of the remaining balance of Rs. 1,13,080/-, the insurance company rejected the claim, citing that there was a sub-limit clause in the policy limiting total expenses for any one illness to 50% of the sum insured. The Complainant made several communications with the agent and the insurance company but didn't receive a satisfactory response. Feeling aggrieved, the Complainant approached District Consumer Disputes Redressal Commission-I (North District), Delhi (“District Commission”) and filed a consumer complaint against the agent and the insurance company.

The Complainant argued that neither the agent nor the policy documents provided by the insurance company contained the alleged sub-limit clause. He argued that the rejection of the claim and subsequent failure to reimburse the remaining amount constituted illegal, unjustified, and unlawful activities on the part of the insurance company, contrary to the principles of natural justice

In response, the insurance company argued that a sum of Rs. 1,00,000/- was paid as per the policy's terms and conditions, which stipulate a sub-limit on expenses for any one illness. Therefore, it asserted that the Complainant was not entitled to any further claim under the policy. The agent didn't appear before the District Commission.

Observations by the District Commission:

The District Commission referred to the decision of the Supreme Court in Texco Marketing Pvt Ltd Vs Tata AIG General Insurance Co. Ltd & others [(2023) I SCC 428] and noted that an insurance company cannot rely on terms and conditions if they were not supplied to the insured. The District Commission noted that without evidence of the insurance company providing the terms and conditions to the Complainant, any exclusion clause upon which the company bases repudiation cannot be upheld.

The District Commission held the insurance company liable for deficiency in services. Consequently, the District Commission directed the insurance company to pay Rs. 1,00,000/- to the Complainant within thirty days from the date of the order. Additionally, it was instructed to pay Rs. 50,000/- as compensation to the Complainant for the mental pain, agony, and harassment endured.

To further address the matter, the District Commission imposed a cost of Rs. 20000/- upon the agent of the insurance company. Half of this amount, Rs.10000/-, was directed to be paid to the Complainant, while the remaining Rs.10000/- was to be deposited in the State Consumer Welfare Fund within 30 days from the receipt of the order.