Insurer Has Duty To Disclose Changed Policy Conditions During Renewal: Supreme Court Grants Mediclaim Relief To Senior Citizens
Case: Jacob Punnen and another versus United India Insurance Co Ltd
Coram: Justices S Ravindra Bhat and KM Joseph
Case No.: Civil Appeal No. 6778 Of 2013
Court Observation: “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”.
“In the present case, the standard form contract, renewed year after year, left the appellants only with the choice of raising the insurance cover”.
“These regulations only underline expressly what was implicit, i.e., the insurer’s obligation to inform every policy holder, about any important changes that would affect her or his choice of product. These have been given statutory shape. Yet, the obligation of the insurer to provide information to existing and policy holders, for them to exercise choice, meaningfully, and choose products suited to their needs, existed. In this case, that obligation was breached”.
“The insurer was clearly under a duty to inform the appellant policy holders about the limitations which it was imposing in the policy renewed for 2008-2009. Its failure to inform the policy holders resulted in deficiency of service”.
“The Insurer had a duty to inform the appellants that a change regarding the limitation on its liability was being introduced. This duty to take the insured into confidence was breached. This was the deficiency in service. Even proceeding on the basis that the policy incorporates the terms of the contract, insofar as the respondent insurer unilaterally purported to incorporate a clearly cumbersome limitation involving a breach of the duty to take the appellants into confidence, the court would not be powerless to undo the wrong. Be it that the policy purported to incorporate the substantive limitation, the appellant can be relieved of the result of the deficiency in service by the insured. This can be done by restoring the position, the appellants would occupy if there was no breach. I would, therefore, agree with my learned Brother that the appeal be allowed on the basis that 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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Keywords
Mediclaim Relief, Senior Citizens, Mediclaim Relief To Senior Citizens
