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Widow Wins Legal Battle: Insurance Firm Ordered To Pay Rs 20.3 Lakh And Compensation

Policyholders are required to disclose all material facts that may influence a prudent insurer’s decision to assume risk, as failure to do so can result in claim repudiation, and at the same time, the insurers must clearly communicate policy terms, ensuring fair obligations for both parties

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In another victory for a policyholder, the Ranga Reddy District Consumer Disputes Redressal Commission has asked an insurance company to pay 20.3 lakh in a housing loan linked insurance claim case to the widow, along with compensation for causing mental harassment to the complainant. 

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According to media reports, the woman had complained that the Bharti Axa Life Insurance Company had rejected her claim after her husband had died. Her husband, a government employee, had taken a loan from PNB Housing Finance. On January 22, 2019, he had paid a premium of Rs 45,824. He died of cardiac arrest on July 6, 2020, after he fell down the stairs of his residence. 

The insurance company rejected the claim on September 30, 2020, and claimed that the deceased had not disclosed information about pre-existing health conditions of hypertension, diabetes, and chronic kidney disease.

However, according to the commission, the insurer had failed to provide evidence to support these allegations. Also, it was found that the insurer failed to provide any concrete evidence from the doctors who treated the man for pre-existing conditions. 

"In the absence of any substantiating evidence and the non-examination of the doctor who treated the deceased insured, the objection raised by the opposing party to deny the claim cannot be valid and sustained," the commission said in its order.

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So, the insurance company has not only been directed to pay Rs 20.3 lakh to PNB housing commission to clear the outstanding loan amount, but Rs 1 lakh needs to be paid to the complainant for having gone through mental agony and Rs 10,000 as costs of litigation. The commission has given the insurance company 45 days to comply with the order. 

Like in health insurance, the insured needs to disclose all pre-existing conditions during taking out a life insurance policy. Since this information is used by insurers to assess risk, failing to do so may lead to claim rejection. However, in such a dispute, there needs to be evidence provided by the insurance company of such non-disclosure. 

“Policyholders are required to disclose all material facts that may influence a prudent insurer’s decision to assume risk, as failure to do so can result in claim repudiation, and at the same time, the insurers must clearly communicate policy terms, ensuring fair obligations for both parties,” says Raadhika Chawla, advocate, Supreme Court of India. 

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A recent case of the Supreme Court’s (SC) ruling in Mahaveer Sharma v. Exide Life Insurance Co. Ltd 2025 SCC OnLine SC 435 upholds the doctrine of uberrima fides (utmost good faith) in insurance contracts, giving significance to the reciprocal duty of both the insured and the insurer. 

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