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TMI Blog2025 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... claim for payment of benefits under the policy; however, the said claim was repudiated vide letter dated 03.03.2016. The claim was repudiated on the ground that there was material suppression by the father of the appellant while applying for insurance policy and respondents have relied upon the terms and conditions of Exide Life My Term Insurance Plan (UIN-114N063V01) in rejecting the claim. The appellant being aggrieved by repudiation of the claim submitted a complaint before the State Commission and the claim was dismissed vide order dated 27.09.2018 on the grounds that while submitting the proposal, the deceased insurer had disclosed only one policy taken by him from Aviva Life Insurance whereas he had concealed other insurance policies which he had taken from the Life Insurance Corporation of India and were in force at the time the insurance cover was sought. 4. The appellant being aggrieved by the order of the State Commission preferred an appeal before the National Commission, but the National Commission dismissed the appeal placing reliance on the judgment delivered by this Court in the case of Reliance Life Insurance Co. Ltd. & Anr. v. Rekhaben Nareshbhai Rathod, (2019) 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not on account of any illness on 19.08.2015. The claim of the appellant was repudiated on 03.03.2016, thereafter, the complaint preferred before State Commission was dismissed on 27.09.2018, and the appeal preferred in the matter was also dismissed on 28.03.2019. The question raised before this Court is whether there was any material suppression of fact on the part of the appellant's father while obtaining an insurance policy or not? The terms and conditions as contained under clauses 51, 52, 53, 54 and 55 reads as under: "51. Are you an existing customer of Exide Life Insurance Company Limited? 52. Have you concurrently/simultaneously applied for any life, health insurance cover with us or any other life, health insurance company which is still under consideration? 53. Have you concurrently/simultaneously applied for any life, health insurance cover with us or any other life, health insurance company which is still under consideration? 54. Please provide details of existing insurance cover on your life in the below table. If you do not have any existing insurance on your life, please mention 'NIL' in Sum Assured column below. Please include any Keyman Insurance, Partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a form to be filled in by the proposer for insurance, for furnishing all material information required by the insurer in respect of a risk, in order to enable the insurer to decide whether to accept or decline, to undertake the risk, and in the event of acceptance of the risk, to determine the rates, terms and conditions of a cover to be granted. Explanation-"Material" for the purpose of these Regulations shall mean and include all important, essential and relevant information in the context of underwriting the risk to be covered by the insurer." Thus, the Regulation also defines the word "material" to mean and include all "important", "essential" and "relevant" information in the context of guiding the insurer in deciding whether to undertake the risk or not. 35. Just as the insured has a duty to disclose all material facts, the insurer must also inform the insured about the terms and conditions of the policy that is going to be issued to him and must strictly conform to the statements in the proposal form or prospectus, or those made through his agents. Thus, the principle of utmost good faith imposes meaningful reciprocal duties owed by the insured to the insurer and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptionally liable to be affected by the peril insured against. This is referred to as the "physical hazard". 39.2. Any fact is material which leads to the inference that the particular proposer is a person, or one of a class of persons, whose proposal for insurance ought to be subjected at all or accepted at a normal rate. This is usually referred to as the "moral hazard". 39.3. The materiality of a particular fact is determined by the circumstances of each case and is a question of fact. 43. The basic rules to be observed in making a proposal for insurance may be summarised as follows: 43.1. A fair and reasonable construction must be put upon the language of the question which is asked, and the answer given will be similarly construed. This involves close attention to the language used in either case, as the question may be so framed that an unqualified answer amounts to an assertion by the proposer that he has knowledge of the facts and that the knowledge is being imparted. However, provided these canons are observed, accuracy in all matters of substance will suffice and misstatements or omissions in trifling and insubstantial respects will be ignored. 43.2. Carel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -disclosure of diabetes and chronic renal failure in relation to a Mediclaim policy, wherein this Court in paragraph 27 held as under: "27. It would be beyond anybody's comprehension that the insured was not aware of the state of his health and the fact that he was suffering from diabetes as also chronic renal failure, more so when he was stated to be on regular haemodialysis. There can hardly be any scope for doubt that the information required in the afore-extracted questions was on material facts and answers given to those questions were definitely factors which would have influenced and guided the respondent Insurance Company to enter into the contract of mediclaim insurance with the insured." 12. An insurance is a contract uberrima fides. It is the duty of the applicant to disclose all facts which may weigh with a prudent insurer in assuming the risk proposed. These facts are considered material to the contract of insurance, and its non-disclosure may result in the repudiation of the claim. The materiality of a certain fact is to be determined on a case-to-case basis. The aforementioned judgements illustrate instances of material facts, wherein the non-disclosure of certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance policy to be taken, the risk to be covered, as well as the queries that are raised in the proposal form. 55.2 What may be a material fact in a case would also depend upon the health and medical condition of the proposer. 55.3 If specific queries are made in a proposal form then it is expected that specific answers are given by the insured who is bound by the duty to disclose all material facts. 55.4 If any query or column in a proposal form is left blank then the insurance company must ask the insured to fill it up. If in spite of any column being left blank, the insurance company accepts the premium and issues a policy, it cannot at a later stage, when a claim is made under the policy, say that there was a suppression or non-disclosure of a material fact, and seek to repudiate the claim." 16. In Mahakali Sujatha (supra), this Court observed that if a claim was repudiated on the ground that the policy holder has suppressed material facts in his application form with respect to existing life insurance policies from other insurers, the burden is on the insurer to prove the allegation of non-disclosure of the material fact and that the non-disclosure was fraudulent. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent company. 19. Therefore, we find that in the facts of this case the respondent-insurer decided to issue a policy to the father of the appellant herein even though it was aware that there was another policy for a higher sum assured which was taken by the insured from Aviva. Thus, the insurer was also aware of the fact that the insured had capability and capacity to pay the premium for the policy obtained from Aviva and was confident that the insured had the capacity to pay the premium in respect of the policy which was issued to the insured by the respondent-insurer for a sum lesser assured being Rs.25 lakh only. Consequently, we find that the repudiation of the policy, in the facts and circumstances of the present case, was improper. Therefore, the appellant herein is entitled to the benefit of the policy which was issued by the respondent herein. 20. In the peculiar facts and circumstances of the present case, the appeal filed by the appellant stands allowed. The order dated 03.03.2016 repudiating the claim of the appellant, the order dated 28.05.2019 passed by the National Commission in First Appeal No. 1963 of 2018 and the order dated 27.09.2018 passed by the State Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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