A District Consumer Commission in Haryana has mandated a private insurance company to compensate a 73-year-old woman with $90,000 (around ₹85 lakh) after her travel insurance claim for treatment of acute heart failure in the United States was inadequately handled. The insurer had initially provided only $9,900 (approximately ₹9 lakh), citing the woman’s diabetes as a contributing factor to her cardiac issues. The commission found the company responsible for inadequate service and unfair trade practices.
In addition to the claim amount, the woman was awarded ₹1.22 lakh as compensation for mental distress, harassment, and legal expenses.
During the proceedings, led by President Jaswant Sing along with members Neeru Agarwal and Sarvjeet Kaur, it was revealed that the woman and her husband had obtained a travel insurance policy for their 61-day trip to the US. While in Texas, she was hospitalized for acute heart failure and non-ST elevation Myocardial Infarction (NSTEMI), requiring angioplasty.
The commission stated on August 25 that the insurance company could not, after accepting the risk associated with her pre-existing condition and charging a premium accordingly, reduce its liability to 10 percent at the claim stage. The insurer had issued a policy covering the full amount of $100,000 without any limitations on cardiac events.
The commission observed that the insurer failed to provide the full coverage amount based on a technicality, which is unacceptable in legal terms. The decision noted that the insurer’s refusal to pay the complete claim constituted a deficiency in service and an unfair trade practice, particularly since the claim was legitimate.
The case highlighted that the hospital bill totaled $100,000, yet the insurer only disbursed $9,900, forcing the complainant’s family to urgently gather the remaining funds. The commission criticized the insurance company for creating an unexpected financial burden on the complainant’s family, especially in a foreign country.
If the hospital bill had not been settled, the complainant would have faced extended hospitalization, leading to further costs. Therefore, the commission deemed the woman entitled to substantial compensation due to the insurer’s negligence.
The 73-year-old had purchased a single-trip international travel insurance policy for $100,000, covering her trip from March 1 to April 30, 2022, after paying a premium of ₹30,494. She had disclosed her pre-existing diabetes during the policy purchase, which was documented.
During her stay in the US, she was hospitalized on March 19, 2022, and underwent treatment, remaining in the hospital until March 23, 2022. Despite the policy’s coverage of $100,000, the insurance company only paid $9,900, claiming her diabetes contributed to her heart condition.
After numerous attempts to obtain clarification and the relevant policy details supporting the insurer’s decision, the woman sought assistance from the Insurance Ombudsman in Chandigarh. However, her complaint was dismissed based on jurisdictional grounds without addressing the merits of her case.
Subsequently, the woman approached the consumer commission, arguing that the insurer wrongfully limited her claim despite having acknowledged her diabetes when issuing the policy.
The insurance company contended that the policy was bound by its terms and conditions, stating that only 10 percent of the sum insured would be payable for treatment related to a pre-existing condition. It maintained that her diabetes was linked to her heart condition and insisted the claim had been processed according to policy stipulations, even questioning the validity of the complaint.
The commission found that the insurer had not convincingly demonstrated that their policy provisions limited the primary inpatient-care benefit to 10 percent. Any ambiguity in the insurance contract should be interpreted in favor of the insured.
The commission remarked on the growing trend among insurance companies to provide misleading assurances at the point of sale, only to deny claims later based on flimsy justifications. It emphasized that such denial of the complainant’s claim was arbitrary and unjustified.
The commission further stated that the insurer could not reinterpret its policy provisions in a manner that undermined the claimant’s right to the full coverage amount. This ruling reaffirms the principle that insurers cannot unjustly restrict coverage based on disclosed pre-existing conditions and highlights their obligation to uphold promised coverage, ensuring fair treatment for consumers.
Consumers encountering similar issues are encouraged to reach out to their respective state consumer helplines for assistance (Haryana helpline: 1800-180-20…).
