Insurer Denied Claim, Court Orders Rs 10 Lakh Payout

The Delhi consumer commission has ordered National Insurance Company to pay Rs 10 lakh with 7% annual interest and Rs 50,000 for litigation costs. The decision came after the insurer failed to prove that the policyholder's treatment was connected to a pre-existing condition. Rita Malhotra, the policyholder, passed away during the case's pendency, and her legal heirs continued the litigation.

The commission noted that the insurer had not provided a substantial defense for rejecting the claim. The policyholder's initial hospitalization in January 2016 for severe cold and cough led to a diagnosis of Type 1 Respiratory Failure. While an initial opinion suggested a link to chronic anemia, a subsequent diagnosis by the same doctor refuted this connection.

Despite this, the third-party administrator denied cashless treatment, relying on the preliminary diagnosis. The commission found the insurer bore the burden of proof for a pre-existing disease link, which they failed to meet. The insurer's argument regarding a reduced sum insured was also unsubstantiated, leading to the final order for reimbursement.