New Delhi, October 10, 2024 – The National Consumer Disputes Redressal Commission (NCDRC) has ruled against HDFC Standard Life Insurance Company Ltd., directing the insurer to pay ₹ 46,87,548.92, with 9% interest, to Mrs. Gangineni Vasundhara. The decision comes after the insurer’s rejection of a life insurance claim was found to be unjustified due to lack of supporting evidence. The NCDRC upheld the earlier decision made by the Andhra Pradesh State Consumer Disputes Redressal Commission.
Background of the Case
The case concerns the life insurance claim filed by Mrs. Vasundhara following the death of her husband in May 2015. He had purchased a life insurance policy from HDFC Life in 2014. Upon his death due to cardiac arrest, Mrs. Vasundhara, as the nominee, submitted a claim to HDFC Life. The insurer, however, repudiated the claim, alleging that the deceased had not disclosed the existence of several prior insurance policies with other companies in the proposal form at the time of taking the policy. The insurer argued that such non-disclosure was a material fact that would have affected the terms under which the policy was issued. Dissatisfied with the claim denial, Mrs. Vasundhara approached the State Commission, which ruled in her favor. HDFC Life then appealed the State Commission's order to the NCDRC.
Insurer's Contentions
HDFC Life contended that the deceased policyholder had breached the principle of "uberrima fidei" (utmost good faith) by failing to disclose existing life insurance policies at the time of purchasing the policy. The insurer argued that such non-disclosure constituted a violation of material facts under the insurance contract. The company further invoked the amended Section 45 of the Insurance Act, 1938, which allows insurers to contest claims within three years for material misrepresentation.
Observations by NCDRC with Final Judgment
The NCDRC noted that the burden of proof to establish the alleged non-disclosure lay with HDFC Life. The commission found that the insurer did not provide adequate evidence, such as the original proposal form or investigator reports, to support its claim that the deceased had deliberately omitted information. The bench emphasized that due diligence was required on the part of the insurer at the time of policy issuance. Since HDFC Life had failed to substantiate its allegations, the rejection of the claim was deemed to amount to a deficiency in service.
The NCDRC, therefore, upheld the State Commission's ruling, ordering HDFC Life to:
- Pay ₹46,87,548.92 to Mrs. Vasundhara, with 9% interest from the date of claim repudiation (December 5, 2015) until the date of realization.
- Compensate ₹2,00,000 for mental agony and ₹25,000 as litigation costs.
- Comply with the order within two months.
Conclusion
The NCDRC’s decision serves as a significant affirmation of consumer rights, emphasizing that insurers cannot reject claims without sufficient evidence to prove allegations of non-disclosure. This ruling underscores the responsibilities of insurers to exercise proper diligence in evaluating policyholder information and to substantiate their grounds for claim repudiation. The case reinforces the principle that an insurer's duties extend beyond reliance on the doctrine of "uberrima fidei" when contesting claims.
Footnote: This case, HDFC Standard Life Insurance Co. Ltd. v. Gangineni Vasundhara, was brought as First Appeal No. 870 of 2020 before the NCDRC, New Delhi.
Disclaimer: This report is based on the judgment of the NCDRC and is for informational purposes only. It does not constitute legal advice.
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