Can hiding information while taking insurance prove costly? The Supreme Court has clarified that hiding one’s drinking habit can result in cancellation of insurance claim, even if the cause of death is different. What lesson should the policyholder learn from this case?
Insurance Claims: The Supreme Court recently gave a very important decision related to insurance. It made it clear that if the policyholder hides any information, his claim can be rejected. In particular, hiding the habit of drinking alcohol can lead to the cancellation of the insurance claim, even if the cause of death is not related to alcohol.
What is the whole case of insurance claim
This case is related to a person who bought ‘Jeevan Arogya’ policy from Life Insurance Corporation of India (LIC) in 2013. While filling the application, he did not tell that he has been drinking a lot of alcohol for a long time. Within a year of buying the insurance, he was admitted to a hospital in Jhajjar, Haryana due to severe stomach pain. After a month of treatment, he suffered a heart attack and died.
His wife filed an insurance claim for the medical expenses, but LIC rejected it, saying that the deceased had concealed information about his alcohol habit. The insurance company argued that their policy clearly does not cover diseases caused by a person’s own habits, behavior or negligence. This also includes diseases caused by excessive consumption of alcohol.
Decision in favor of wife in consumer forum
Initially, the District Consumer Forum ruled in favor of the deceased’s wife. It ordered LIC to pay Rs 5.21 lakh. The state and national consumer commissions also upheld this decision, saying that the death was due to a heart attack and not due to any liver-related disease. However, LIC challenged this decision in the Supreme Court.
Supreme Court ruled in favor of LIC
A bench of Supreme Court Justices Vikram Nath and Sandeep Mehta overturned the decisions of the consumer commissions and ruled in favor of LIC. The court said that this was not an ordinary insurance policy but a specialized health insurance plan with strict rules.
The Supreme Court also clarified that “alcohol-related diseases do not occur overnight.” The deceased had been consuming alcohol for a long time, and he had concealed this fact and provided false information. This was the reason why it was justified to reject LIC’s claim.
However, the court did not order the return of Rs 3 lakh already given to the widow, keeping in mind her financial condition.
