Alcohol Traces Cannot Be The Sole Reason To Deny Insurance, Says Kerala High Court

The Kerala High Court has ruled that an insurance company cannot reject an accident claim merely because alcohol was detected in the insured person’s blood, according to a report by LiveLaw.in. The court said the insurer must prove that the person’s senses were actually impaired by alcohol and that this condition led directly to the accident.

The case involved a government employee who died when his motorcycle collided with a bus. His wife, who was the nominee under a group personal accident policy, filed for compensation. The insurance company refused to pay, citing the post-mortem report, which showed traces of alcohol in the bloodstream.

The Insurance Ombudsman, however, directed the insurer to release the payment, observing that the report alone could not prove intoxication or a causal link between alcohol consumption and the crash.

The insurer then approached the Kerala High Court, which upheld the Ombudsman’s decision and ordered that the claim be paid.

Presence Of Alcohol Doesn’t Mean Intoxication

The High Court said that the expression “under the influence of alcohol,” as used in insurance policies, cannot be interpreted to mean every instance where alcohol is detected in the body. A small amount of alcohol may not impair a person’s coordination or alertness. To deny a claim, the insurer must prove that the insured’s mental or physical faculties were clearly affected by alcohol, and that such impairment directly caused the accident.

The judges emphasised that accident insurance policies are meant to protect families in times of sudden loss. The purpose would be defeated if insurers rejected claims simply based on test results without showing any real connection between alcohol and the accident. The court also noted that exclusion clauses, those that limit the insurer’s liability, must always be read narrowly. The burden of proof lies squarely on the insurer, not on the grieving family seeking compensation.

A Reassuring Verdict For Policyholders

For families, the judgment offers relief and clarity. It ensures that an insurance claim cannot be rejected on the basis of assumptions or incomplete evidence.

For insurers too, the ruling ensures that before turning down a claim, companies must investigate thoroughly and rely on clear, objective proof, and not just on lab results or suspicion. The High Court also pointed out that insurers should frame policy terms with precision to avoid ambiguity and future disputes.