Consumer Commission Penalises Insurer for Wrongful Rejection of Health Insurance Claim
Insurance Company Directed to Reimburse Medical Expenses.
The District Consumer Disputes Redressal Commission has held an insurance company liable for wrongfully rejecting a health insurance claim and directed reimbursement of medical expenses along with compensation.
Facts of the Case
The complainant had purchased a health insurance policy with a sum insured of ₹10 lakh.
During the policy period, he underwent treatment for Hepatitis-A and incurred medical expenses amounting to approximately ₹45,000. When the reimbursement claim was submitted, the insurer rejected it on the ground that the disease was allegedly attributable to alcohol consumption and therefore excluded under the policy.
Insurance Company’s Defence
The insurer relied upon medical records indicating that the patient had been advised to avoid alcohol and argued that the claim fell within policy exclusions relating to alcoholism and substance abuse.
Findings of the Consumer Commission
The commission carefully examined the medical records and found no evidence establishing that the complainant was undergoing treatment for alcoholism or de-addiction.
It observed that a doctor’s advice to avoid alcohol cannot automatically prove that a disease resulted from alcohol consumption.
The commission termed the repudiation arbitrary and contrary to the policy terms.
Relief Granted
The insurer was directed to:
Reimburse medical expenses of ₹45,000.
Pay interest on the amount.
Pay ₹15,000 as compensation for mental harassment and litigation expenses.
Key Legal Takeaway
Insurance claims cannot be rejected merely on assumptions. Insurers must establish a clear nexus between the medical condition and the policy exclusion before repudiating a claim.
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