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Rights panel orders insurance company to compensate client for unfair denial of claim

INDRights panel orders insurance company to compensate client for unfair denial of claim

The Ernakulam District Consumer Disputes Redressal Commission has ordered an insurance company to pay a client ₹3.21 lakh towards reimbursement of medical expenses and compensation for denying a claim, citing psychiatric and behavioural disorders.

The commission comprising president D.B. Binu and members V. Ramachandran and Sreevidhia T.N. issued the verdict on a petition filed by a father-daughter duo against Star Health and Allied Insurance Company Limited.

The daughter had to undergo treatment after she fell from the balcony of her residence and sustained injuries. According to the complainants, she was covered under a family health insurance policy provided by the opposite party. However, the insurance company rejected the claim, citing that the treatment was related to behavioural disorders and intentional self-injury, which were excluded under the policy.

The complainants contested this and provided evidence that she was treated for injuries from the fall and not for psychiatric or behavioural issues. Despite this, their request for reconsideration was rejected by the insurance company.

The opposite party claimed that the injury was due to deliberate self-harm and not an accident and cited hospital documents to assert that. They emphasised that she had been on psychiatric treatment since 2012, which predisposed her to such behaviour. The insurance company accused the complainant of vexatious and frivolous litigation, aimed at harassing the company and seeking unlawful enrichment.

The petitioners argued that the opposite party’s decision was based on erroneous medical interpretations and irrelevant factors, making the denial of claim.

“The opposite parties have failed to prove that the exclusion clauses are applicable in this instance as per the evidence provided by the complainants. The policy terms have been interpreted in a manner detrimental to the rights of the consumer, which is contrary to the spirit of the Consumer Protection Act. The commission finds that the opposite party wrongfully denied the health insurance claim, leading to significant financial distress and mental anguish to the complainants,” the commission observed.

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