'Insurance Is A Safety Net, Not Hurdle': Kerala Consumer Forum Raps Insurer For Denying Valid Claim, Imposes Cost

The Bench of D.B. Binu (President), V. Ramachandran and Sreevidhia T.N. ordered that the opposite parties would be jointly and severally liable to make payment of Rs. 25,000/- as compensation and Rs. 5,000/- as costs to the complainant.

The complainant in the case was a beneficiary of a group health insurance policy issued by the Opposite Party 2, administered through Opposite Party 1. The policy was meant to provide coverage of up to Rs. 5 lakhs on payment of Rs. 2.69 lakhs as premium.

During the period of validity of the insurance policy, the complainant was admitted with bulbar urethral stricture, posterior urethral calculus, Type-2 diabetes mellitus, and systemic hypertension. He underwent visual internal urethrotomy (VIU) and the hospital bill came up to Rs. 71,553/-.

The hospital submitted the claim directly to the opposite parties but they only partially approved the claim, for an amount of Rs. 35,000, citing exhaustion of sub-limit for urinary stone removal. The complainant argued that the procedure was for urethral stricture and not stone removal as evidenced by the discharge summary and therefore, the reduction was unjustified.

The opposite parties contended that as per its investigation and scrutiny of the discharge summary and operation notes, the procedure that was undergone by the complainant was for urinary stone (calculus) removal. They submitted that urethral stricture was a complication for chronic calculus disease.

According to them, as per special condition (h) of the policy, claim for stone removal was capped at Rs. 35,000/-.

The complainant alleged deficiency in service. He produced various documentary evidence, including the doctor's certificate, which confirmed that the procedure was for VIU.

The Bench, after analyzing the oral and documentary evidence adduced by both sides, came to the conclusion that the complainant was maintainable and that there was unfair trade practice and deficiency in service of the opposite parties.

It found that the insurer's contention that the claim pertained to urinary stone removal was factually incorrect. It applied contra proferentem, a principle in insurance law that states that an ambiguous term in the policy is to be interpreted against the drafter/insurer.

It observed:

“The Opposite Parties' application of a urinary- stone sublimit to a stricture-relieving VIU is arbitrary, medically unsustainable and contractually unfounded. We hold the OPs deficient in service; the plea of strict construction is unavailable where the clause is misapplied to a procedure it does not cover.”

It also relied on Dr. A.M. Muraleedharan v. The Senior Divisional Manager, LIC rendered by the Kerala High Court wherein it was held that denial of insurance claim for medical treatment amounts to violation of the right to life under Article 21 of the Constitution.

The Commission felt that it would appropriate monetary compensation for the mental agony, harassment and hardship underwent by the complainant. It further observed:

“We cannot ignore the human reality behind this file: the Complainant sought urgent treatment for a painful, intimate condition and, while recovering, was drawn into a technical dispute about sub-limits that did not match the surgery actually performed. An insurance policy is meant to be a safety net in those anxious hours—not another hurdle. The record shows that despite a valid cover, clear discharge summary, and a doctor's certificate, the claim was pared down on a narrow reading that cherry-picked an incidental reference to calculus. The ensuing calls, emails, and short-payment caused avoidable distress over a relatively modest balance when compared to the sum insured. Consumer protection is, at its heart, about restoring that sense of fairness. Our decision aims to do just that, and to signal that claim assessment must be accurate, humane, and faithful to the medical evidence.”

It, thus, allowed the complaint and ordered the opposite parties to pay the balance hospital bill. It also awarded compensation and costs of the proceedings with interest.

Case No: C.C. No. 341 of 2025

Case Title: Iype P. Joseph v. Future Generali India Insurance Co. Ltd. and Anr.

Counsel for the complainant: Vinu Elizabeth Sasi

Counsel for the opposite parties: Albin A. Joseph

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