New Delhi: Supreme Court has held that an insurance company is entitled to deny a claim if a policyholder did not disclose alcohol consumption at the time of purchasing the policy.
A bench of Justices Vikram Nath and Sandeep Mehta upheld the Life Insurance Corporation‘s decision to deny a claim over hospitalisation of a policyholder under the ‘Jeevan Arogya’ scheme on the grounds that he had furnished false information regarding his habit of alcohol consumption.
In this case, the man had purchased the ‘Jeevan Arogya’ policy in 2013, under which he was to get benefits such as Rs 1,000 per day for non-ICU hospitalisation and Rs 2,000 per day for ICU hospitalisation. He was hospitalised a year after with severe abdominal pain, and a month thereafter he passed away.
LIC rejected the claim filed by the policyholder’s widow on the grounds that the deceased had withheld information about his chronic alcoholism.
Referring to Clause 7(xi) of the Jeevan Arogya Plan, LIC said the policy excludes coverage for “self-inflicted injuries or conditions (attempted suicide) and/or the use or misuse of any drugs or alcohol and complications arising from it”.
The deceased’s wife had moved the consumer forum, which directed LIC to reimburse the medical expenses. However, SC disagreed with the order of National Consumer Disputes Resolution Commission.
The court said that the deceased’s “alcoholism was a long- standing condition, which he knowingly suppressed while subscribing to the policy”. “Given this suppression of material facts, the appellant was justified in repudiating the claim under the exclusion clause,” it said.
