An Insurer Cannot deny the Claim citing Existing Medical Conditions: Supreme Court

New Delhi, December 28, 2021 (PTI): An insurer cannot deny a claim by citing an existing medical condition, which was disclosed by the insured in the proposal after the issue of the policy, the Supreme Court said. A bench of Justices DY Chandrachud and BV Nagarathna also observed that a proposer has a duty to disclose to the insurer all material facts to the best of his knowledge. It is assumed that the proposer knows all the facts and circumstances relating to the proposed insurance. While the proposer can disclose only what is known to him, the proposer's duty of disclosure is not limited to his knowledge, it also extends to those material facts which, in the ordinary course of business, he should be aware of, the court said. & quot Once the policy is issued after assessing the medical condition of the insured, the insurer cannot deny the claim by citing the existing medical condition, which was disclosed by the insured in the proposal form and in what circumstances a particular risk has happened in respect of which the claim has been made by the insured,& quot the bench said in a recent judgment. The top court was hearing an appeal filed by Manmohan Nanda against an order of the National Consumer Disputes Redressal Commission (NCDRC), dismissing his plea to claim for medical expenses in the United States. Nanda bought a foreign mediclaim business and holiday policy as he wanted to travel the US. Upon arrival at the San Francisco airport, he suffered a heart attack and was admitted to the hospital where he underwent angioplasty. Three stents were inserted into the heart vessels to clear the blockage. Thereafter, the appellant claimed the cost of treatment from the insurer, which was later dismissed stating that the appellant had a medical history of hyperlipidemia and diabetes which was not disclosed at the time of purchase of the insurance policy. The NCDRC had concluded that since the complainant was under stable medication, which was not disclosed at the time of purchasing the mediclaim policy, he failed to comply with the disclosure of his health condition. The Supreme Court held that the rebuttal of the policy by the insurance company of the US was illegal and not in accordance with the law. It said that the purpose of purchasing a mediclaim policy is to seek compensation in respect of sudden illness or disease which is not expected or imminent and which may occur abroad. The bench said that if the insured suffered a sudden illness or disease, which is not expressly excluded under the policy, the insurer is obligated to compensate the appellant for the expenses incurred.