Can a spelling error cost Rs 50 lakh? Consumer court clears confusion, but rejects insurance claim: Here’s why

ICICI Prudential argued that the insurance contract was based on the principle of ‘utmost good faith’ and required complete disclosure of medical history by the policyholder. (AI-generated image)

Battle over one letter in a name

• A major turning point in the case revolved around two contradictory medical certificates issued by the same doctor.
• One certificate dated March 14, 2020, allegedly stated that “Shakil Ahmad” had been suffering from coronary artery disease (CAD) and was under treatment since May 16, 2017. But another certificate dated November 13, 2020, claimed that “Shakeel Ahmad” had never suffered from any major illness, including CAD.
• The complainant argued that the two certificates related to different individuals because the names were spelled differently.
• But the state commission was unconvinced.
• It pointed out that both records carried the same date of birth, June 2, 1977, and the same date of death, October 29, 2019.
• It also noted similarities in address details, insurance policy references and even the family doctor’s records.
• The commission concluded that the spelling variation between “Shakil” and “Shakeel” was merely clerical and did not indicate two separate persons.

Court questions doctor’s explanation

During the proceedings, Dr Vishal Hussain reportedly stated that the two certificates referred to different individuals. However, the state commission said the doctor failed to produce any documentary proof, identity records or supporting evidence to establish that claim.

The bench further noted that the doctor himself had earlier mentioned the name “Shakil Ahmad” in a family doctor certificate linked with the insurance claim documents submitted by the complainant.

“These circumstances clearly indicate that the names of Shakil Ahmad and Shakeel Ahmad were being used interchangeably in the documents pertaining to the same insured person,” the commission observed, indicating that the person in question did have coronary artery disease.

Widow initially won Rs 50 lakh payout

• The dispute traces back to a life insurance policy purchased by Shakeel Ahmad from ICICI Prudential for a sum assured of Rs 50 lakh after paying a premium of Rs 7,357.
• His wife, Sitara Begum, was named as the nominee under the policy.
• The policy came into effect on September 21, 2019. But tragedy struck just weeks later when Shakeel Ahmad died on October 29, 2019, only one month and seven days after purchasing the insurance cover.
• Following his death, Begum submitted a claim seeking the insured amount.
• However, the insurance company rejected the claim on March 31, 2020, alleging that the deceased had hidden a serious pre-existing heart condition, CAD, while filling out the proposal form.
• The insurer refunded the premium amount instead.
• Claiming that the rejection was illegal and arbitrary, Begum approached the district consumer commission in Uddhamsingh Nagar.
• In September 2022, the district commission ruled in her favour and directed ICICI Prudential to pay Rs 50 lakh along with 6 per cent annual interest from September 1, 2020, besides litigation costs of Rs 5,000.

Insurance firm flagged ‘concealment’ of illness

• ICICI Prudential challenged that order before the state commission, arguing that the insurance contract was based on the principle of “utmost good faith” and required complete disclosure of medical history by the policyholder.
• The insurer said the deceased had been suffering from CAD since 2017 and was undergoing treatment under Dr Vishal Hussain before purchasing the policy.
• According to the company, these facts were deliberately concealed at the time of taking the insurance cover.
• The company also stressed that the death occurred barely over a month after issuance of the policy, which prompted a detailed investigation.

State panel reverses order

After reviewing the evidence, the state commission held that the district commission had failed to properly appreciate the documentary material and surrounding circumstances. The bench said the available records supported the insurer’s allegation that the policyholder had suppressed material facts regarding his medical condition while purchasing the policy.

The commission also referred to Section 45 of the Insurance Act, 1938, which permits insurers to repudiate claims in cases involving suppression or misrepresentation of material facts within the prescribed period.

Allowing the insurer’s appeal, the state commission set aside the September 28, 2022, order of the district consumer commission and dismissed Sitara Begum’s complaint.

Insurance firm to pay Rs 10 crore to family 29 years after man died in accident

Nearly three decades after a Jaipur businessman died in a road accident, the National Consumer Disputes Redressal Commission (NCDRC) has reaffirmed its earlier direction, awarding Rs 10 crore with 9 per cent annual interest to his family, holding that the insurer failed to justify the rejection of a high-value personal accident insurance claim.

The national consumer commission declared the insurer’s rejection letter “untenable” and held that the company could not substantiate allegations of suppression of material facts because it failed to produce the original proposal forms forming the basis of the dispute.

A bench of Justice A P Shahi, President and Bharat Kumar Pandya, Member, was hearing two connected complaints filed by a widow, one Asha Garg and her family, against United India Insurance, over the rejection of personal accident insurance policies issued to the deceased businessman.