Case Note & Summary
The appellant, Manmohan Nanda, sought an overseas mediclaim policy from United India Assurance Co. Ltd. to travel to the USA for a family wedding. He underwent a medical examination at the insurer's instance, which revealed diabetes type II but no other adverse condition. The insurer issued the policy valid from 19 May 2009 to 1 June 2009. Upon arrival in San Francisco, the appellant felt unwell and was diagnosed with heart blockages requiring angioplasty and stent insertion. He incurred medical bills of approximately USD 2,41,932. The insurer repudiated the claim on the ground that the appellant had a pre-existing condition of hyperlipidaemia and had been prescribed statins, which he failed to disclose. The appellant filed a consumer complaint before the National Consumer Disputes Redressal Commission, which dismissed the complaint, holding that the appellant had suppressed material facts. The Supreme Court allowed the appeal, setting aside the Commission's order. The Court held that the insurer failed to prove that the appellant had knowledge of hyperlipidaemia at the time of filling the proposal form. The proposal form required answers to the best of the insured's knowledge and belief. The medical records showed that hyperlipidaemia was noted only after the appellant's treatment in the USA, and the prescription of statins for diabetes was precautionary. The Court emphasized that the burden of proving deliberate non-disclosure lies on the insurer, which was not discharged. Consequently, the repudiation was invalid, and the insurer was directed to pay the claim amount with interest.
Headnote
A) Insurance Law - Pre-existing Disease Exclusion - Disclosure of Material Facts - The insurer repudiated the claim on the ground that the insured had suppressed the fact of suffering from hyperlipidaemia and being on statin medication. The insured contended he had no knowledge of hyperlipidaemia at the time of proposal. The Supreme Court held that the burden is on the insurer to prove that the insured had knowledge of the alleged pre-existing condition and that non-disclosure was deliberate. Since the insurer failed to discharge this burden, the repudiation was invalid (Paras 1-14). B) Insurance Law - Uberrima Fides - Duty of Good Faith - The principle of utmost good faith requires both parties to act honestly. However, the duty to disclose extends only to facts known to the insured. The proposal form required answers to the best of the insured's knowledge and belief. The Court held that where the insured had no knowledge of a condition, there is no suppression (Paras 12-14). C) Insurance Law - Burden of Proof - Pre-existing Condition - The insurer must prove that the insured had a pre-existing condition and that it was known to the insured at the time of taking the policy. Mere prescription of statins as a precautionary measure for diabetes does not establish knowledge of hyperlipidaemia. The Court found that the insurer's evidence was insufficient to prove that the insured knew of hyperlipidaemia (Paras 12-14).
Issue of Consideration
Whether the repudiation of an overseas mediclaim policy on the ground of non-disclosure of a pre-existing disease (hyperlipidaemia) was valid when the insured had no knowledge of the condition at the time of filling the proposal form.
Final Decision
The Supreme Court allowed the appeal, set aside the order of the National Consumer Disputes Redressal Commission dated 22nd May, 2015, and directed the respondent insurer to pay the claim amount with interest at the rate of 9% per annum from the date of repudiation until payment, within eight weeks.
Law Points
- uberrima fides
- pre-existing disease exclusion
- burden of proof on insurer
- knowledge of insured
- disclosure of material facts
