Hyderabad District Commission Holds New India Assurance Co. Liable For Wrongful Repudiation Of Corona Kavach Insurance Claim

Brief Facts:

Mr. KSKS Vara Prasad Rao (“Complainant”) after testing positive for Covid-19, underwent home isolation and later received treatment at Apollo Hospitals Institutional Isolation (“Hospital”). The Complainant earlier purchased a Corona Kavach Insurance Policy of the New India Assurance Company Ltd. (“Insurance Company”). Later, the Complainant submitted the claim regarding the expenses incurred in the hospital to the insurance company. However, the Complainant didn't receive any response from the insurance company. Later, the Complainant sent a registered letter to the insurance company. Despite receiving the letter, the insurance company didn't reply to it. Thereafter, the Complainant approached the District Consumer Disputes Redressal Commission – I, Hyderabad, Telangana (“District Commission”) and filed a consumer complaint against the insurance company.

In reply, the insurance company denied the allegations, asserting that the Complainant failed to submit the discharge bill and treatment records necessary for processing the claim. It contended that the discharge summary provided by the Complainant was not comprehensive and lacked the required treatment details. Despite sending multiple reminders to the Complainant, the insurance company didn't receive any original treatment record. It argued that without the necessary documents, including the treatment record, discharge bill, and payment receipts in original, the Complainant was not entitled to reimbursement of the treatment charges.

Observations by the Commission:

Referring to the oral submissions and relevant Insurance Regulatory and Development Authority of India (IRDAI) guidelines, which mandate expeditious handling of COVID-19-related claims, the District Commission held that the insurance company's failure to settle the claim contradicted the principles of natural justice and fair play. The District Commission held that insurance companies cannot adopt a hands-off approach regarding claims during a pandemic when people are facing hardship.

Further, the District Commission noted that despite the submission of the requested registration certificate of the hospital by the Complainant, the insurance company did not settle the Complainant's claim. Therefore, the District Commission concluded that the non-settlement of the claim was unjust and against the principles of fairness.

Subsequently, the District Commission directed the insurance company to pay the insurance claim amount of Rs. 45,840/-, along with compensation of Rs. 10,000/- to the Complainant. Additionally, the District Commission directed the insurance company to pay Rs. 10,000/- for the litigation costs incurred by the Complainant.