12 years on, Marine Drive resident gets $5,00,000 for repudiated insurance claim

Updated on Oct 03, 2022 05:32 AM IST

The National Consumer Disputes Redressal Commission (NCDRC) on Thursday directed the Oriental Insurance Company Limited to pay the insurance claim of USD 2,40,000.

Deserted view of Marine Drive, in Mumbai, India.(HT photo)
Deserted view of Marine Drive, in Mumbai, India.(HT photo)

Nearly 12 years after his overseas travel insurance claim for USD 2,40,000 was repudiated by his insurer, a Marine Drive resident will receive double the amount, about USD 5,00,000, he had claimed for.

The National Consumer Disputes Redressal Commission (NCDRC) on Thursday directed the Oriental Insurance Company Limited to pay the insurance claim of USD 2,40,000, which Mukul Sonawala had to spend for his treatment as in-house patient in Colorado in May 2010, when he went to the USA on a 26-day trip, along with interest at the rate of 9% per annum from December 2010, when the claim was repudiated.

Sonawala had moved the NCDRC soon after the nationalised general insurance company repudiated his claim on December 30, 2010, on the grounds that the cause of his hospitalization at Colorado – Malaria - was a pre-existing illness.̣

He said he had obtained overseas travel insurance from Oriental Insurance Company by paying the premium and it provided cover of USD 2,50,000. He questioned the repudiation of his claim, contending that he would not have travelled overseas if he was unwell and also pointed out that he had been examined by an authorised doctor of the insurance company before issuance of the insurance and not diagnosed with any pre-existing illness.

Alleging that the act of repudiation was illegal and amounted to deficiency in service and unfair trade practice, he had sought a direction to the insurance company to pay the claim with interest at the rate of 18% per annum, compensation for mental agony and cost of the litigation.

The insurance company contested the consumer complaint, claiming that the report of the hospital noted that the Sonawala had admitted that there had been an outbreak of malaria in Mumbai and prior to his departure, his son and a few neighbours had also contracted malaria.

The company also submitted an opinion from a doctor which stated that as P-Vivax malaria incubation period varies from 10 days to 2-4 years, the insured was in carrier stage when he travelled to USA and claimed that as per the Mediclaim Policy conditions no pre-existing conditions are payable and therefore the claim was repudiated under exclusion clause.

The submissions, however, failed to impress upon the NCDRC.

A single member bench of presiding member Subhash Chandra said the repudiation was done on the ground that the insured suffered from a pre-existing illness, as he was a carrier of Malaria infection. “However, as on the date of the medical examination by the authorised doctor of the opposite party (insurance company) the complainant was not found to be suffering from malaria,” said the NCDRC bench.

“There is no evidence produced by the opposite party to establish this fact. Therefore, it is not clear on what basis the opposite party has concluded that malaria was a pre-existing illness,” said the Commission. “It is only a presumption and assumption that he contracted malaria from his son or neighbours. The reason for repudiation of the claim is therefore, based not on medical evidence but on a surmise which cannot be a valid ground for repudiating the claim,” it concluded.

The NCDRC has now directed Oriental Insurance Company to pay the Marine Drive resident the claim amount of USD 2,39,991.81 along with interest at 9% per annum from December 30, 2010 when the claim was repudiated. The company will have to shell out interest at the rate of 12% per annum, if it fails to pay the amount in two months.


    Special Correspondent. I have spent over a decade covering courts in Mumbai, primarily the Bombay High Court, and including several important trials like trial of 120 accused in March 1993 Mumbai bombings, 26/11 case - trial of Ajmal Kasab.

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