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Kanwaljit Singh v. National Insurance Company Ltd.

Civil Appeal · 2019 INSC 907Decided 14 Aug 2019
Civil Appeal No. 6255 of 2019
Justice Uday Umesh Lalit · Justice Vineet Saran

Background

Kanwaljit Singh had taken individual Mediclaim policies for his family since 2007-08 and switched to a "Parivar - Family Mediclaim Policy" with a Rs. 5,00,000 sum insured for 2014-15. During that policy year, his son Master Jasnoor Singh required hospitalization twice at PGI Chandigarh, running up medical bills of about Rs. 8.55 lakh. National Insurance Company first repudiated the claim and then paid only Rs. 27,550, citing a supposedly pre-existing disease and basing payment on an old, much smaller individual policy sum. Consumer fora gave inconsistent relief, the District Forum awarded a small top-up, the State Commission awarded the full Rs. 5,00,000, and the National Commission restored the District Forum's low figure, prompting this appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that since no pre-existing disease existed when the original policy was first taken in 2007-08 and it had been continuously renewed since, the insurer could not invoke a pre-existing-disease exclusion. Interpreting the Family Mediclaim Policy's own clause, the Court found the payout for any one family member's illness is capped at 50% of the family's total sum insured (i.e., 50% of Rs. 5,00,000 = Rs. 2,50,000), not the full sum insured and not the lower amount the insurer had calculated from an old individual policy. It therefore allowed the appeal in part, directing the insurer to pay Rs. 2,50,000 (minus amounts already paid), plus Rs. 50,000 for mental agony/harassment, Rs. 30,000 in costs, and 7.5% interest from the date of the original complaint.

Lesson Learnt

Under a family floater/Mediclaim policy, an insurer cannot deny a claim on a "pre-existing disease" ground if no such condition existed when the policy was first taken and it has been continuously renewed since; and the per-illness payout cap under such policies must be read strictly from the policy's own wording (commonly 50% of the family's total sum insured), not arbitrarily scaled down by the insurer.

Official source (sci.gov.in)View Judgment (PDF)

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