Insurer can't refuse claim citing existing medical conditions: Supreme Court on mediclaim policy

 An insurer cannot repudiate (refuse) a claim by citing an existing medical condition that was disclosed by the insured in the proposal form, once the policy has been issued, the Supreme Court has said.

A bench of justices DY Chandrachud and BV Nagarathna also said a proposer is under a duty to disclose to the insurer all material facts within his knowledge. The proposer is presumed to know all the facts and circumstances concerning the proposed insurance, it added.

While the proposer can only disclose what is known to him, the proposer's duty of disclosure is not confined to his actual knowledge, it also extends to those material facts which, in the ordinary course of business, he ought to know, the court said.

"Once the policy has been issued after assessing the medical condition of the insured, the insurer cannot repudiate the claim by citing an existing medical condition, which was disclosed by the insured in the proposal form and which condition has led to a particular risk in respect of which the claim has been made by the insured," the bench said in a recent judgment.

The Supreme Court said the repudiation of the policy by the United India Insurance company was illegal and not in accordance with law. It said the object of buying a mediclaim policy is to seek indemnification in respect of a sudden illness or sickness that is not expected or imminent and that may occur overseas.

"If the insured suffers a sudden sickness or ailment, which is not expressly excluded under the policy, a duty is cast on the insurer to indemnify the appellant for the expenses incurred thereunder," the bench said.