The Insurer had a duty
to inform the appellants that a change regarding the limitation on its
liability was being introduced
Case Title:
Jacob Punnen and another versus United India Insurance Co Ltd
Decided on 9 Dec 2021
“The Insurer had a duty
to inform the appellants that a change regarding the limitation on its
liability was being introduced.
Case law : Jacob
Punnen and another versus United India Insurance Co Ltd,
A bench
comprising Justices S Ravindra Bhat and KM Joseph was considering an
appeal against an order of the National Consumer Disputes Redressal Commission,
which denied relief to the appellants.
Facts of the case
;The appellants, two senior citizens, had availed a mediclaim policy from
United India Insurance
in 1982, which was renewed on yearly basis. In 2008, the second appellant had
to undergo angioplasty surgery. A claim of Rupees 3.82 lakhs was submitted by
the appellants to the insurer with respect to the angioplasty surgery. The
coverage at the relevant time was Rs 8 lakhs. However, the insurer accepted the
claim for only Rupees 2 lakhs, saying that the renewed agreement had a clause
which limited the liability with respect to surgeries like angioplasty to an
amount of Rs.2 lakhs.The policy holder is under the impression that the existing
conditions are being renewed.If the renewed contract is agreed, in all
respects, by both parties,undoubtedly the fresh terms (with restrictions) would
be binding. However, that would not be the case when a new term is introduced unilaterally
about which the policy holder is in the dark. Further, the allusion to continuation
of the terms of the Gold policy in respect of senior citizens (who were not to
be compelled to migrate to another policy) but were to be subject to the same
terms, upon payment of a different rate of premia, reinforces the conclusion
that there was in fact, a renewal of the existing terms".
Duty of insurers
The Court noted that a
striking feature of the insurance contract is the principle of uberrima fide (duty
of utmost good faith). In this backdrop, the insurer cannot plead that it is
the duty of the
policyholders to
satisfy themselves about the terms and conditions.The Court took note of two
particular facts - (1) the appellants are in need of health insurance due to
advanced age; (2) the insurance policies are in standard form which
offers no space for bargain or negotiation.In the present case, the standard
form contract, renewed year after year, left the appellants only with the
choice of raising the insurance cover That being the situation, the
"informational blackout by the insurer was a crucial omission, held
the Court.
Justice Joseph held :
“‘The
Insurer had a duty to inform the appellants that a change regarding the
limitation on its liability was being introduced. there was unjustifiable
non-disclosure by the Insurer about the introduction of clause of limitation
and, in this case, it constituted a deficiency in service and resultantly the
appellants are entitled to relief”
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