Exclusion clauses must be communicated

The National Commission held there was no evidence to show that Veena had been served the terms and conditions governing the policy

Vijender Pal Mahajan bought an insurance policy from Aegon Life Insurance on March 13, 2012. The policy, called Aegon Religare Health Plan, had a tenure of five years. It covered Vijender as well as his wife Veena for a sum of Rs 4,90,000. The annual premium was Rs 34,705.

During the tenure of the policy, Veena had to be hospitalised. She was admitted to Medanta Medicity Hospital in Gurgaon on April 20, 2012, and was found to be suffering from severe Aortic Stenosis (AS), Type-II diabetes, and hypothyroidism. On April 23, 2012, she underwent surgery for aortic valve replacement.

A claim of Rs 4,04,039 was lodged for treatment and hospitalisation. It was repudiated on two grounds: first, that the ailment was due to pre-existing medical conditions, including resultant complications which were excluded under clause 6 of the policy; and secondly, that clause 5.2 of the policy provided for a waiting period of 90 days, while the ailment had occurred within 34 days of the inception of the policy.

Aggrieved, Veena filed a complaint before the Amritsar District Consumer Forum. She questioned the repudiation based on the terms and conditions which had never been supplied to her along with the policy. This was contested by the insurer. The forum upheld the insurer’s stand and dismissed the complaint.

Veena appealed against the order. The State Commission observed that the insurer had not placed on record any evidence to show that the policy terms and conditions had been dispatched to the insured to make her aware of the exclusion clauses under the policy. Since the insurer had failed to prove that the terms of the policy had been communicated, the State Commission allowed the appeal. It set aside the district forum’s order, and held the insurer liable to settle the claim.

The insurer filed a revision petition before the National Commission. It argued that the State Commission had ignored the receipt issued by Blue Dart Courier and had wrongly concluded that there was no evidence to prove that the policy terms and conditions had been supplied to Veena. The insurer also argued that diabetes and hypothyroidism diagnosed during hospitalisation could not have occurred “overnight”. So, it implied that Veena had failed to disclose these ailments while applying for the policy. It also contended that even if the claim was payable, the amount would be limited to Rs 1,02,000 as it was a fixed indemnity plan.

The National Commission observed that there were different dates, June 28, 2017, and March 13, 2012, mentioned on the copy of Blue Dart Courier’s receipt that had been produced. However, the original document had not been produced. Besides, there was no evidence to indicate who had delivered the letter and who had received it. So, the Commission held that there was no evidence to show that Veena had been served with the terms governing the policy. Consequently, it would not be permissible to repudiate the claim on the basis of exclusion clauses which had not been communicated. For the same reason, the quantum of the claim could not be limited to Rs 1,02,000 and the entire amount of Rs 4,04,039 would be payable as it fell within the overall coverage limit.

On merits, the Commission observed that there was no evidence to show that the insured was aware that she was suffering from diabetes and hypothyroidism till these ailments were discovered during hospitalisation.

Accordingly, by its order of August 3, 2023, delivered by Subhash Chandra, the National Commission dismissed the insurer’ s revision and held the insurer liable to settle the entire claim.

The writer is a consumer activist