The National Consumer Disputes Redressal Commission, led by AVM J. Rajendra, has held Bajaj Allianz Life Insurance responsible for wrongful repudiation of an insurance claim and has overturned the decision of the State Commission.
The case involves a complainant whose son had purchased a life insurance policy from Bajaj Allianz Life Insurance. The policy had an annual premium and a sum assured. Unfortunately, the son passed away suddenly, and the complainant, as the nominee, filed a claim with the insurer. However, the insurer paid only the fund value and rejected the full claim. The reason given for the rejection was that the deceased had failed to disclose alcohol consumption in the health declaration form, which the insurer argued affected the terms of the policy.
The complainant, however, maintained that her son was healthy and had no history of alcohol consumption. She stated that the insurer’s rejection of the claim caused her emotional distress. Upset by the decision, she filed a consumer complaint before the District Commission, seeking the sum assured and compensation. The District Commission ruled in favor of the complainant and ordered the insurer to pay Rs. 4,28,618 towards the claim.
The insurer, dissatisfied with the decision, appealed to the State Commission of Gujarat, which sided with the insurer and overturned the District Commission’s order. This prompted the complainant to file a revision petition before the National Commission.
In its defense, the insurer argued that the deceased had failed to disclose chronic alcohol consumption and liver disease, which were discovered during an investigation after his death. They claimed that if these conditions had been known, the policy would not have been issued or would have had different terms. The insurer also pointed out that the policy had lapsed due to non-payment of premiums and was later revived by the deceased through a Declaration of Good Health (DGH) form. In this form, the deceased allegedly failed to disclose alcohol-related health issues. Based on this investigation, medical records, and the DGH form, the insurer concluded that the death was caused by alcohol-related liver disease. As a result, the insurer rejected the claim for Rs. 4,08,000 but paid the complainant only the fund value of Rs. 20,618, arguing that this decision followed proper procedure.
The National Commission, however, focused on whether the policyholder had failed to disclose alcohol consumption and liver disease, and whether such non-disclosure justified the rejection of the claim. The insurer claimed that the deceased had consumed alcohol daily for 12 years but did not mention it in the Declaration of Good Health. The complainant countered that her son had never consumed alcohol, as stated in the original proposal form. The insurer relied on a hospital admission record to support its claim, but the Commission noted that this record was unsigned and lacked corroborating evidence or affidavits to prove regular alcohol consumption.
The Commission pointed out that unsigned hospital records alone could not be used to establish the insurer’s claim. Additionally, the insurer failed to meet the burden of proof required to apply an exclusionary clause, as clarified in previous rulings. The Commission concluded that the insurer had not sufficiently proven false declarations or material non-disclosure. Following legal precedents, the Commission noted that any ambiguity in evidence should favor the insured. As a result, the rejection of the claim was deemed unjustified.
In the end, the National Commission upheld the District Forum’s order and allowed the complainant’s revision petition, directing the insurer to pay the full sum assured.
