The District Consumer Disputes Redressal Commission-I in Chandigarh has ordered Star Health and Allied Insurance Company to pay Rs 25 lakh to the heirs of a deceased policyholder, Sarita Dutta alias Sarita Sharma, whose medical claim was wrongly repudiated. The policyholder had purchased a health insurance policy from Star Health in 2018 for a sum of Rs 25 lakh, which was renewed annually until 2023. In 2024, she was diagnosed with cancer and underwent medical treatment before passing away on September 6, 2024.
The insurance company rejected the claim and cancelled the policy, citing non-disclosure of a prior ovarian cyst surgery conducted in 2017. However, the complainants’ counsel argued that the surgery had revealed a benign cystadenoma with no evidence of malignancy, and that the company had wrongly repudiated the claim after five years of continuous renewals, violating IRDAI regulations.
The Commission found that the insurer’s repudiation was unjustified, as the 2017 medical records indicated the absence of cancer or malignancy. The Commission also observed that the IRDAI regulations prohibit contesting health policies after a 60-month “moratorium period” except in cases of established fraud. Since the policy had been in force for over six years, the Commission ruled that the insurance company’s actions violated these provisions.
The Commission directed the company to pay Rs 25 lakh as the insurance amount, along with Rs 25,000 as litigation cost and compensation. The order stated that the claim was wrongly repudiated by the insurance company by misinterpreting the terms and conditions of the policy, amounting to deficiency in service and unfair trade practice. This ruling upholds consumer rights in insurance matters and highlights the importance of insurance companies adhering to regulatory provisions and treating policyholders fairly. The Commission’s decision provides relief to the heirs of the deceased policyholder and sets a precedent for similar cases in the future.