Not furnishing true and full information ground for rejecting mediclaim: SC
Legal File - Not furnishing true and full information ground for rejecting mediclaim: SC
The Supreme Court rules that the insured has an obligation to disclose full information sought by insurance companies. It is not for the insured to argue whether the information sought is material for the purpose of the policy or not
The Supreme Court has said that insurance companies can repudiate a mediclaim policy if true and full information is not furnished. It is obligatory to make a true and full disclosure about the information sought by insurance companies and it is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not, said the apex court.
"A mediclaim policy is a non-life insurance policy meant to assure the policy holder in respect of certain expenses pertaining to injury, accidents or hospitalisations. Nonetheless, it is a contract of insurance falling in the category of contract uberrimae fidei, meaning a contract of utmost good faith on the part of the assured.
Thus, it needs little emphasis that when an information on a specific aspect is asked for in the proposal form, an assured is under a solemn obligation to make a true and full disclosure of the information on the subject which is within his knowledge.
"It is not for the proposer to determine whether the information sought for is material for the purpose of the policy or not", said a bench comprising Justice DK Jain and Justice RM Lodha.
Section 45 of the Insurance Act, 1938 which places restrictions on the right of the insurer to call in question a life insurance policy on the ground of mis-statement after a particular period, has no application in mediclaim policy.
The term "material fact" is not defined in the Insurance Act but it has to be understood to mean as any fact which would influence the judgment of a prudent insurer in fixing the premium or determining whether he would like to accept the risk. Any fact which goes to the root of the Contract of Insurance and has a bearing on the risk involved would be "material", court said.
"In a contract of insurance, any fact which would influence the mind of a prudent insurer in deciding whether to accept or not to accept the risk is a "material fact". If the proposer has knowledge of such fact, he is obliged to disclose it particularly while answering questions in the proposal form. Needless to emphasise that any inaccurate answer will entitle the insurer to repudiate his liability because there is clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance", court said in its judgment.
The court dismissed the plea of the lady appellant. Her husband Pritpal Singh Sandhu aged about 48 years after completing necessary formalities insured himself under a mediclaim policy provided by the New India Assurance Co. The policy was for a period from May 7, 1990 to May 6, 1991.
The annual premium of Rs 1,500 was also paid by him. On September 11, 1990, Singh suddenly fell ill and was admitted to hospital in Ludhiana. Later he was shifted to Madras Institute of Nephrology also known as, Vijaya Health Centre, Chennai where his condition deteriorated, ultimately leading to his death on December 26, 1990. The appellant claimed for Rs 23,217.80 for reimbursement of the expenses incurred on hospitalisation.
The company, however, repudiated the policy on the ground that the true information about the disease was not furnished at the time of taking the policy.
Source: The Economic Times, 13 Jul 2009
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