HDFC Life Ordered To Pay ₹50 Lakh After Consumer Court Rules Proposal Form Was Ambiguous

The Kurnool Consumer Commission held that an insurer cannot reject a genuine insurance claim based on vague proposal forms unless it proves intentional and material suppression of facts.

By Vidhi Lalla 

In a significant ruling strengthening consumer rights, the Kurnool District Consumer Disputes Redressal Commission in Andhra Pradesh has directed HDFC Life Insurance Company to pay a ₹50 lakh life insurance claim to the widow of an ICU doctor whose claim had been rejected over the alleged non-disclosure of two existing insurance policies.

The commission ruled that the insurer’s proposal form did not clearly ask applicants to disclose policies issued by other insurance companies and that there was no evidence of fraudulent intent or any connection between the alleged omission and the insured’s death.

The order is expected to have wider implications for insurance claim disputes involving ambiguous proposal forms and technical grounds for claim rejection.

Doctor Died While On Night Duty

The complaint was filed by Bonthala Sindhuja, wife and nominee of late Dr G Sravan Kumar, an anaesthesiologist and ICU duty doctor at Aadya Multi Speciality Hospital in Kurnool.

Dr Kumar had purchased an HDFC Life Click 2 Protect Super Policy with a sum assured of ₹50 lakh. The policy commenced on October 15, 2022, after payment of an annual premium of ₹11,478.28.

On February 16, 2024, while on night duty, Dr Kumar was found unconscious in the doctors’ rest room and was declared dead due to sudden cardiac arrest.

After submitting the required documents, his wife filed a death claim as the nominee.

Why HDFC Life Rejected The Claim

HDFC Life repudiated the claim on May 22, 2024, stating that Dr Kumar had failed to disclose two existing life insurance policies while filling the proposal form:

• A policy worth over ₹1 crore with Kotak Life Insurance
• A ₹1 crore policy with Bharti AXA Life Insurance

The insurer argued that insurance contracts are governed by the principle of utmost good faith, and had these policies been disclosed, the company might not have issued the policy.

Its internal review committee upheld the rejection in June 2024.

Widow Challenged The Decision

Sindhuja approached the Consumer Commission, arguing that:

• Her husband died due to a natural cardiac arrest while on duty.
• The alleged non-disclosure had no connection with the cause of death.
• The insurer failed to prove that the omission influenced its underwriting decision.
• The rejection was arbitrary and based on technical interpretation rather than any fraudulent concealment.

She also argued that merely holding multiple life insurance policies cannot automatically become a reason to reject a genuine death claim.

Commission Finds Proposal Form Was Ambiguous

After examining the proposal form, the commission observed that the questionnaire specifically referred to existing HDFC Life policies, but did not clearly ask applicants to disclose life insurance policies issued by other insurers.

The commission held that ambiguous questions drafted by the insurer cannot later be interpreted against policyholders.

Applying the legal principle of contra proferentem, the commission ruled that any ambiguity in an insurance contract must be interpreted against the party that drafted it—in this case, the insurer.

Section 45 Of Insurance Act Applied

The commission also relied on Section 45 of the Insurance Act, which requires insurers to prove that any alleged suppression was:

• Material to the risk,
• Fraudulent, and
• Knowingly made.

The commission noted that HDFC Life failed to establish any of these conditions.

It also found no evidence that the existence of the other policies had any bearing on either:

• the decision to issue the policy, or
• Dr Kumar’s death due to cardiac arrest.

The commission further criticised HDFC Life’s review committee for mechanically upholding the rejection without independently examining the complainant’s objections.

Supreme Court Judgment Strengthened The Widow’s Case

The Consumer Commission also relied on the Supreme Court’s February 2025 judgment in Mahaveer Sharma vs Exide Life Insurance Co. Ltd.

In that judgment, the apex court held that:

• Non-disclosure of previous insurance policies alone is insufficient to reject a claim.
• Insurers must establish that the omission materially influenced the underwriting decision.
• Technical omissions without fraudulent intent cannot automatically defeat genuine insurance claims.

Finding the present dispute similar, the commission applied the same legal principles.

Compensation Ordered

Allowing the complaint partly, the commission directed HDFC Life to pay:

• ₹50 lakh towards the policy amount,
• ₹50,000 as compensation for mental agony, and
• ₹10,000 towards litigation costs.

The insurer has been directed to comply within 45 days. Failure to do so will attract 12 per cent annual interest on the awarded amount from January 24, 2025, the date the consumer complaint was filed, until payment is made.

Why The Judgment Matters

The ruling reinforces that insurers cannot rely on vaguely worded proposal forms or technical omissions to deny genuine claims. It also reiterates that under Indian insurance law, the burden lies on insurers to prove deliberate and material suppression before repudiating a policy.

Legal experts believe the decision will encourage insurers to draft clearer proposal forms while providing stronger protection to policyholders and their families against arbitrary claim rejections.

Disclaimer: Insurance claims depend on the specific policy terms, proposal form, evidence and facts of each case. This judgment applies to the circumstances of this dispute and should not be treated as an automatic precedent for all insurance claim rejections.