INSURER CANNOT REJECT CLAIM ONLY DUE TO DELAY IN RENEWING POLICY

Consumer Forum rules rejection for this reason ‘completely unacceptable’, directs National Insurance to pay policy holder the amount plus interest

An insurance company cannot reject a claim under the mediclaim insurance policy only on the hyper-technical grounds of a mere 11 days delay in renewing the policy, the Thane District Consumer Forum has ruled.   The forum determined that rejection of the claim for this reason was only to suit the insurance company’s interests, and was therefore “completely unacceptable”. 

    Making these observations, the two-member bench of U V Jawlikar and N D Kadam directed National Insurance Co to pay Virar based Prabha Iyer an amount of almost Rs 1 lakh — Rs 58,000 as claim amount, over Rs 26,000 as interest, and Rs 15,000 as compensation for mental agony and litigation cost.  The insurer, citing 11 days delay in renewing the mediclaim policy by Iyer in 2007,wanted her to undergo a four-year “cooling off period for covering pre–existing diseases” all over again, but the forum thwarted the attempt. 

    In April 2003, Iyer had bought a mediclaim policy for Rs 1 lakh from National Insurance. Thepolicyhadaclausespecifyingawaitingperiod of four years before Iyer could claim expenses incurred on ailments already existing in her body. This meant that she qualified to make such claims only after April 2007.  Iyer kept renewing her policy without a break till April 2007 when, due to some unavoidable circumstances, she could renew it only after a delay of 11 days. 

    She fell ill in June 2007 and was admitted to PD Hinduja Hospital. The next month, she fell ill again and this time was admitted to a hospital in Kalyan. She sought reimbursement of Rs 58,284 from National Insurance for expenses incurred during both periods of hospitalization.     

The insurer, however, rejected the claim saying that Iyer was hospitalized due ailments in existence since 1998, and since she had delayed renewal of her policy in April 2007, it was now a fresh policy and she would therefore have to wait for four years before making claims under the relevant clause. 

    Iyer finally approached the consumer forum in 2009. During hearing of her complaint, the forum found out from her policy documents that even while renewing her policy after an11-day delay in April 2007, the insurer had noted the original proposal date as “April 2004”, which meant that even as per its own records,National Insurance had not treated the policy as “fresh”. Yet, when it came to reimbursing Iyer’s claim, the company rejected it citing the hyper-technical ground just for its convenience. The forum has now directed National Insurance to pay the entire amount to Iyer by December29,or face an increased interest rate.

Source : Sunil Baghel – Mumbai Mirror – 18/11/2013