73-year-old woman suffered heart failure in Texas, denied full claim, wins over Rs 86 lakh

“Having accepted the risk at inception with full knowledge of the disclosed pre-existing disease, charged a premium accordingly, and issued a policy for the full sum insured of 100,000 USD without any endorsement limiting cover for cardiac events, the opposite party cannot, at the claim stage, unilaterally cut down its liability to 10 per cent by re-invoking the very fact it had already accepted and priced into the policy,” the commission said on August 25.

The order noted that it appears that the insurance company has not paid the entire sum assured on the technical ground. It added that the claim amount cannot be denied only on the technical ground, which is impermissible in the eyes of law.

“The act of the opposite party, while declining the remaining claim amount, amounts to deficiency in services and unfair trade practice, which is otherwise proved genuine,” the order added.

The commission pointed out that the hospital raised the bill for an amount of 100,000 USD, but the insurance company has paid only 9,900 USD, which was 10 per cent of the sum assured, and the remaining amount had to be arranged by the family of the complainant in a very short span of time. The order pulled up the insurance company’s act, observing that only due to the negligent act of the company, unexpected expenses had to be arranged by the family members of the complainant on an urgent basis, particularly in a foreign country.

If the said amount could not be paid to the hospital, the complainant had to remain in the hospital as the hospital, without receiving the bill amount, would not discharged the complainant, and under these circumstances, the bill of the hospital would raise on the higher side and create more burden on the complainant and her family, and for this the complainant is entitled for the heavy compensation.

Woman hospitalised during US trip

A 73-year-old woman purchased a single-trip international travel insurance policy for 100,000 USD covering her US travel from March 1 to April 30, 2022, after paying a premium of Rs 30,494. She had disclosed her pre-existing diabetes at the time of purchasing the policy, which was recorded in the policy documents.

During her US trip, she was hospitalised in Texas on March 19, 2022, after suffering acute heart failure and non-ST elevation Myocardial Infarction (NSTEMI), and underwent angioplasty. She remained in hospital for three days and was discharged on March 23, 2022. The hospital bill amounted to 145,838 USD.

The woman alleged that, although the policy covered 100,000 USD, the insurance company paid only USD 9,900, 10 per cent of the sum insured, claiming that her diabetes was a contributory risk factor for the cardiac condition.

Thereafter, the woman repeatedly sought clarification and the relevant policy clause supporting the deduction, but the insurer did not initially provide the settlement documents. She then approached the Insurance Ombudsman, Chandigarh, which, according to her, dismissed her complaint solely because the claim exceeded its Rs 30 lakh pecuniary jurisdiction, without deciding the merits.

The woman then approached the consumer commission alleging that the insurer had wrongfully restricted her claim despite having known about and accepted her diabetes when issuing the policy.

Woman’s diabetes linked to her heart condition: Insurer

The insurance company submitted that the policy was subject to its terms and conditions and that, where treatment was related to a pre-existing disease or its complications, only 10 per cent of the sum insured was payable.

It argued that the woman’s diabetes was linked to her heart condition and that the claim had already been settled according to the policy. The insurer also challenged the maintainability of the complaint.

Denial of claim was arbitrary: Order

The commission held that the insurer had failed to clearly establish that its “Life Threatening Condition due to PED” provision capped the primary inpatient-care benefit at 10 per cent. Any ambiguity in the insurance contract had to be construed in favour of the insured.

“Nowadays, it has become a trend for insurance companies to issue the policies by giving false assurances, and when the insured amount is claimed, they make such type of excuses. Thus, the denial of the claim of the complainant is arbitrary and unjustified,” the commission remarked.

“The opposite party cannot, without clear and unambiguous language to that effect, take the benefit described in its own Schedule as ‘optional’ as if it operated to override and reduce the complainant’s primary entitlement under benefit to the full sum insured,” the commission said.

Takeaway

This judgment reinforces that insurers cannot arbitrarily restrict coverage by relying on a pre-existing disease already disclosed and accepted while issuing the policy. It protects policyholders from technical claim denials and underscores insurers’ duty to honour promised coverage, ensuring fair treatment of consumers.

Consumers facing similar grievances may contact the consumer helpline in their respective states (Haryana helpline: 1800-180-2087) or dial the National Consumer Helpline at 1915 for assistance.