Mumbai Widow's Rs 78 Lakh Insurance Claim Rejected by NCDRC Over Non-Disclosure of Medical History
The National Consumer Disputes Redressal Commission (NCDRC) has delivered a significant ruling that reinforces the fundamental principle of "uberrimae fidei" or utmost good faith in insurance contracts. In a case that has drawn attention to consumer rights and insurer obligations, the commission rejected a Mumbai widow's claim for over Rs 78 lakh from a Rs 90 lakh life insurance policy, citing her late husband's failure to disclose his extensive medical history.
The Case Details and Commission's Verdict
Presiding Member AVM Jonnalagadda Rajendra AVSM, VSM (Retd) and Member Justice Anoop Kumar Mendiratta heard the consumer complaint filed by Arati Dhananjay Deshmukh, widow of late Dhananjay Bhanudas Deshmukh. The complaint challenged the rejection of the remaining assured amount of over Rs 78 lakh, interest at 18% per annum, compensation of Rs 15 lakh for harassment, and litigation costs of Rs 10 lakh.
In its January 16 order, the commission stated: "Life insurance contracts are based on uberrimae fidei, i.e. founded on the doctrine of utmost good faith, which impose a strict duty upon the proposer to make full, true and complete disclosure of all material facts within his knowledge."
Understanding the Doctrine of Uberrimae Fidei
The doctrine of uberrimae fidei represents a cornerstone of insurance law that mandates both insurers and policyholders to act with complete transparency. This principle establishes a higher standard of honesty than ordinary commercial contracts, requiring the disclosure of all material facts that could influence the insurer's decision to accept the risk and determine premium rates.
- Both parties must disclose all relevant information truthfully
- Any failure to share material details can result in voided policies or denied claims
- The duty extends beyond actual knowledge to facts one should reasonably know
- The principle applies regardless of whether the policy is labeled as "wealth" or "non-medical"
Key Findings and Legal Reasoning
The commission found that the deceased had suppressed material facts while answering specific health-related questions in the proposal form dated December 2, 2015. Investigation revealed that Dhananjay Deshmukh had been suffering from serious and long-standing ailments including:
- A neuroendocrine (carcinoid) tumour with liver metastasis since approximately 2004
- Multiple major surgeries, chemotherapy, and radio-frequency ablation treatments
- Chronic kidney disease and hypertension since 2006
- A transient ischemic attack (TIA) in 2010
The commission held that such medical history was "neither minor nor trivial, but went to the root of risk assessment and underwriting." The bench emphasized that the duty of disclosure is assessed at the time of proposal submission, not retrospectively based on whether the eventual cause of death was directly linked to the undisclosed ailment.
Background of the Insurance Policy and Claim
Dhananjay Deshmukh had purchased the ICICI Pru Elite Wealth-II Unit Linked Insurance Plan (ULIP) on December 2, 2015, for a ten-year term with a sum assured of Rs 90 lakh. The annual premium of Rs 9 lakh was duly paid, and the policy was issued on December 11, 2015, projected as a wealth-cum-life cover product providing both investment benefits and risk coverage from inception.
Tragically, Deshmukh died on August 15, 2016, at Lilavati Hospital in Mumbai, just eight months and four days after the policy commenced. Following his death, the complainant submitted the claim along with hospital records and medical documents in March 2018.
The Claim Rejection and Subsequent Proceedings
The insurer, ICICI Prudential Life Insurance Company Limited, rejected the claim through a letter dated March 30, 2018, alleging non-disclosure of serious pre-existing medical conditions. Instead of settling the death claim, the insurer credited Rs 11.52 lakh to the complainant's account, treating it as the surrender value of the policy.
The complainant argued that the policy was essentially a wealth policy and not a health or mediclaim policy, and therefore strict disclosure standards should not apply. She contended that her husband was medically stable at the time of taking the policy, actively employed, and had no intention to suppress any information.
However, the insurer maintained that the death occurred within three years of policy issuance, making it an early claim that permitted detailed investigation under Section 45 of the Insurance Act, 1938. The investigation revealed the extensive medical history that had not been disclosed in the proposal form.
Wider Implications for Insurance Consumers
This ruling serves as an important reminder for all insurance consumers about their disclosure obligations. The commission rejected the argument that labeling a policy as "wealth" or "non-medical" diluted the duty of disclosure, stating that "the obligation flows from the proposal form and the contract itself, and is not dependent on whether the insurer chose to conduct a medical examination."
The decision reinforces that insurance contracts are special contracts based on mutual trust and complete transparency. Policyholders must understand that even inadvertent omissions of material facts can have serious consequences, potentially voiding their coverage and leaving beneficiaries without financial protection.
For insurers, the ruling affirms their right to investigate claims thoroughly, particularly when death occurs shortly after policy issuance. The case demonstrates how courts will interpret and apply the principle of utmost good faith in consumer disputes, balancing individual rights with contractual obligations.
