Consumer Court Pulls Up Tata AIG Over Rejected Mediclaim, Orders Insurer to Pay Over ₹60,000

The Haryana consumer commission ruled that an insurer cannot reject a health insurance claim merely on suspicion of a pre-existing illness without legally admissible evidence. The order also highlights what policyholders can do if a genuine claim is unfairly denied.

By Vidhi Lalla 

A consumer court in Haryana has directed Tata AIG General Insurance Company Ltd. to pay more than ₹60,000 to a policyholder after finding that the insurer had wrongly rejected his mediclaim by alleging concealment of a pre-existing disease without sufficient legal evidence.+

The District Consumer Disputes Redressal Commission (DCDRC), Karnal, held that insurers cannot deny genuine health insurance claims based on assumptions or unverified medical records. The commission ordered Tata AIG to reimburse ₹40,246 towards medical expenses, pay 9% annual interest from September 5, 2022, until payment, and provide ₹20,000 as compensation for mental agony, harassment and litigation expenses.

Accident claim led to dispute

Bhag Singh of Haryana had purchased a group mediclaim policy through Axis Bank with a sum insured of ₹5 lakh. In August 2022, he reportedly slipped on the stairs at his home and suffered serious injuries to his right leg and knee. After undergoing surgery at a private hospital and incurring medical expenses of about ₹45,000, he submitted a reimbursement claim.

The insurer rejected the claim, alleging that the policyholder had failed to disclose a pre-existing condition polio residual paralysis, while purchasing the policy. Tata AIG argued that this non-disclosure entitled it to cancel the policy and repudiate the claim under the policy conditions.

Bhag Singh, however, maintained that his hospitalization resulted solely from an accidental fall during the policy period and had no connection with any pre-existing illness. He also stated that all required documents had been submitted to support the claim.

Why the commission ruled against the insurer

After examining the records, the commission found that Tata AIG had failed to prove that the policyholder had deliberately concealed any pre-existing disease.

It observed that the insurer relied mainly on a photocopy of hospital records mentioning a history of polio. However, the document did not specify how long the condition had existed. The insurer also failed to produce the treating doctor as a witness or file an affidavit to authenticate the medical records.

The commission held that such unverified documents had no evidentiary value and that the claim had been rejected on presumptions rather than legally admissible evidence. It also referred to previous National Consumer Disputes Redressal Commission (NCDRC) rulings stating that insurers cannot rely on unproved photocopies to establish concealment of disease.

While allowing the complaint, the commission criticised the growing tendency of insurance companies to reject genuine claims on technical grounds. It also referred to earlier observations of the Punjab and Haryana High Court that insurers should not collect premiums only to evade liability when valid claims arise.

Although Bhag Singh initially sought reimbursement of around ₹45,000, the commission limited the reimbursement to ₹40,246, as this matched the documented medical bills and the amount originally claimed before the insurer.

What can an insurer do if it suspects concealment?

Insurance companies are not powerless when they suspect that a policyholder has hidden material information. However, they must follow due process and support their decision with credible evidence. They can:

• Conduct a detailed investigation into the claim.
• Seek original medical records from hospitals and treating doctors.
• Obtain expert medical opinions where necessary.
• Examine doctors or submit sworn affidavits to establish the authenticity of medical records.
• Prove that the undisclosed illness existed before the policy was issued and that the policyholder knowingly concealed it.
• Reject or cancel a policy only when the alleged non-disclosure is supported by legally admissible evidence and is material to the claim.

The commission made it clear that suspicion alone is insufficient and that insurers cannot deny claims based solely on assumptions or unverified documents.

What policyholders should do if a claim is rejected

Experts advise policyholders to:

• Carefully read the insurer’s rejection letter and understand the stated reason.
• Seek a detailed written explanation and supporting documents from the insurer.
• Preserve all medical records, bills, prescriptions and correspondence.
• File a grievance with the insurer and escalate it through the company’s grievance redressal mechanism if necessary.
• Approach the Insurance Ombudsman or the appropriate Consumer Commission if they believe the rejection is unjustified.
• Always disclose all known medical conditions truthfully while purchasing or renewing a policy to avoid future disputes.

Disclaimer: This report is based on the findings of the District Consumer Disputes Redressal Commission in a specific case. The outcome of insurance disputes depends on the facts, policy terms and evidence presented in each individual matter.