The District Consumer Disputes Redressal Commission in Mysore, Karnataka, ruled that an insured individual who takes out multiple insurance policies with different agents and uses various name variations, suggesting a pre-existing illness, must disclose this information to the insurer. The commission held that insurance contracts are based on the principle of “utmost good faith” and that any concealment of material facts can vitiate the policy.
The case involved a father who took out two insurance policies from the Life Insurance Corporation of India (LIC) on the same day, with a total sum assured of Rs. 3,50,000/-. After his death, the complainant (his daughter) filed a claim, but LIC repudiated it, citing that the father had failed to disclose his pre-existing illness. The complainant alleged that her father had not concealed any information and that LIC had wrongfully refused to pay the claim.
The commission reviewed the medical records and found that the father had been admitted to hospital multiple times before taking out the insurance policies, with a final diagnosis of chronic liver disease. The commission also noted that the father had taken out four insurance policies within a short span of three months, using different variations of his name and involving multiple agents. This conduct raised suspicions about his intentions and suggested that he was aware of his pre-existing illness.
The commission referred to the Supreme Court’s decision in Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, which held that insurance contracts are based on the principle of “utmost good faith” and that any suppression of material facts can vitiate the policy. As a result, the commission held that LIC’s repudiation of the claim was justified and dismissed the complaint.
This case highlights the importance of transparency and disclosure in insurance contracts. Insurance companies must ensure that proposers disclose all material facts related to their health and medical history. If an insured individual attempts to conceal this information, the insurer may repudiate the claim, as was the case in this instance.