Insurance Policy – Repudiation on the ground of material suppression of existing life insurance policies from other insurers –  Section 45 of the Insurance Act, 1938 –

On 5.5.2009 and 22.3.2010, the father of the complainant had taken two insurance policies for Rs.4,50,000/- and Rs.4,80,000/-, respectively, from the respondent – Insurance Company.  The insured had answered in the negative to the details of his existing life insurance policies with other insurers as sought in the form of the policy.

The complainant – daughter of the insured was the nominee in both the policies.  On 28.2.2011, the policy holders died in a train accident leaving the complainant as his legal heir as also nominee.

By the letter dated 31.12.2011, the respondent repudiated the claim of the complainant on the ground of suppression of existing life insurance policies from other insurance policies by the deceased insured.

On 27.8.2014, the District Forum allowed the complaint and the appeal of the respondent was dismissed by the State Consumer Forum.

However, by the judgment dated 22.7.2019 of the National Consumer Disputes Redressal Commission, allowed the revision of the Insurer and set-aside both the orders of the District Consumer Forum and State Consumer Commission.

HELD that the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and vice versa.   This inherent duty of disclosure was common law duty of good faith originally founded in equity and has later been recognized    The standard of duty of disclosure imposed on the insured could make the insured vulnerable as the statements in the proposal form could be held against the insured.  Conversely, certain clauses in the policy insurance could be interpreted in the light of contra proferentem rule as against the insurer.

Interesting facts – There were two queries Nos.6.1 and 6.2 (as extracted in para 39 of the judgment) in the declaration form which were answered in the negative by the insured.   On consideration of said queries, it was found that they are not clear in themselves as we have discussed the same above.  Therefore, the answer given by the deceased cannot be taken in a manner so as to negate the benefit of the policy by repudiation of the same on the demise of the insured.

Judgment dated 10.4.2024 in Civil Appeal No.3821 of 2024 of Mahakali Sujatha Vs. The Branch Manager, Future Generali India Life Insurance Company Limited and Another