If a person conceals facts about pre-existing fatal disease at the time of taking insurance, would it be a breach of insurance contract? NCDRC explains

National Consumer Disputes Redressal Commission

National Consumer Disputes Redressal Commission (NCDRC): The Coram of Dinesh Singh (Presiding Member) and Karuna Nand Bajpayee (Member) upheld the decision of the District Commission with respect to concealment of pre-existing fatal diseases at the time of taking insurance.

A revision petition was filed challenging the State Commission’s Order.

The dispute was with respect to the repudiation of the claim on the death of the insured. The parties in the present matter are the insurance company i.e., the petitioner and nominee/widow of the deceased insured was the respondent.

Repudiation of the claim was on the ground of concealment of pre-existing fatal diseases at the time of taking the insurance.

Crux

Whether or not the insured knew that he was suffering from fatal diseases, and he deliberately suppressed his medical condition when he took the policy.

The President of District Commission held that the insured had knowledge of his medical condition when he took the policy and he deliberately suppressed material facts when he took the policy. The other two members held that the insured came to know of his fatal diseases only subsequent to the taking of the policy, when the relevant tests and investigations were conducted in the hospital where he was admitted for treatment just before he died. Accordingly, the majority view was that the complaint deserved to be allowed.

State Commission observed that the onus of proving the fact that the insured had prior knowledge that he was suffering from fatal diseases and as such he deliberately suppressed these material facts at the time of filling up the proposal form was on the insurance co.

Further, it was noted that, there was no evidence on record to show that the insured had knowledge that he was suffering from fatal diseases prior to taking the policy and there was inadequate evidence to support that he had deliberately suppressed his medical condition.

Decision of NCDRC

Coram held that the State Commission’s decision was well appraised reasoned order, and no perversity was found for interference.

The Commission agreed with the counsel for the insurance company that suppression of material facts about pre-existing disease/medical condition would undoubtedly be a breach of the insurance contract, which was of utmost good faith.

In the present matter, the onus of establishing the fact that there was a deliberate suppression of material facts was on the insurance company which onus it failed to discharge by adducing the adequate evidence to substantiate such contention.

In view of the above discussion, the petition was dismissed.

Therefore, the award by the District Commission was upheld by the State Commission and has been confirmed. [LIC of India v. Mamta Sipani, 2022 SCC OnLine NCDRC 41, decided on 2-3-2022]


Advocates before the Commission:

For the Petitioner: Mr. Jai Vardhan, Advocate for Ms. Harvinder Kaur, Advocate

For the Respondent: Mr. Yashvir Singh Kadiyan, Advocate

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