Max Life Insurance Ordered To Pay over Rs26 Lakh to Widow after Wrongfully Rejecting Claim
Moneylife Digital Team 03 June 2025
The national consumer disputes redressal commission (NCDRC) has upheld a compensation award of Rs25 lakh and costs against Max Life Insurance Co Ltd, directing the insurer to pay the assured amount along with interest and costs to a Chandrapur-based widow, whose husband’s death insurance claim was rejected due to alleged non-disclosure of a pre-existing health condition.
 
In an order issued last month, the NCDRC bench comprising presiding member Subhash Chandra and member air vice-marshal (AVM) J Rajendra (retd) says, "After careful consideration of the entire facts and circumstances of the case, it is evident that Max Life Insurance did not establish that the deceased life assured (DLA) was in fact suffering certain medical conditions and he was aware of the same, prior to answering the questions in the proposal form for obtaining the insurance policy in question. This was imperative to determine whether the DLA answered such questions, knowing them to be false. Because there is a good possibility that the DLA was not aware of his medical condition prior to filling the proposal form and Max Life Insurance has not established anything to the contrary."
 
The dispute dates back to 2013, when complainant Shalini Shastrakar approached the Maharashtra state consumer disputes redressal commission after Max Life Insurance repudiated her claim following the death of her husband, Devendra Wamanrao Shastrakar. He had purchased a life insurance policy worth Rs25 lakh from Max Life Insurance in December 2012 after undergoing all required medical tests. He passed away in April 2013, reportedly due to jaundice.
 
The insurer, however, rejected the claim, arguing that Mr Shastrakar, the policyholder, had concealed his medical history, particularly a diagnosis of heart disease, and claimed he was treated for congestive cardiac failure (CCF) at a local hospital in November 2012, just before the policy was issued. Max Life Insurance argued that this omission constituted material non-disclosure.
 
The Maharashtra state commission, in its 2016 order, found no reliable evidence proving that Mr Shastrakar was aware of or treated for any such heart condition prior to purchasing the policy. It held Max Life Insurance's claim repudiation unjustified and directed the insurer to pay Rs25 lakh with 9% interest from September 2013, Rs1 lakh for mental harassment, and Rs10,000 as litigation costs.
 
Max Life Insurance appealed the decision before NCDRC, but the national commission upheld the earlier order. It observed that Max Life Insurance failed to provide conclusive proof that the deceased had knowingly suppressed a serious health condition. 
 
The commission pointed out that key medical documents submitted by Max Life Insurance lacked signatures, were unauthenticated photocopies and were not backed by affidavits from treating doctors or relevant witnesses. It also noted contradictions in Max Life Insurance’s evidence, such as references to a hospital admission facilitated by one Lata Zode, an individual whose relationship with Mr Shastrakar, the DLA, was never established.
 
The commission cited the Supreme Court’s ruling in Mahakali Sujatha vs Future Generali India Life Insurance Co and reiterated the principle of contra proferentem, stating that any ambiguity in insurance documents must be interpreted against the insurer. It also reaffirmed that the burden of proving material non-disclosure rests with the insurance company which Max Life Insurance failed to do.
 
In a strong observation, NCDRC stated that “there is a good possibility that the deceased was unaware of any such medical condition prior to filling the insurance proposal form,” and thus could not be held guilty of suppressing material facts.
 
With this ruling, Max Life Insurance must now pay the full policy amount of Rs25 lakh along with interest and compensation, totalling more than Rs26.1 lakh, to Ms Shastrakar. The decision serves as a stern reminder to insurers about the importance of fair practices and the heavy burden of proof required to justify claim repudiation.
 
(First Appeal No1653 of 2016 Date: 21 May 2025)
Comments
badhri9984
1 week ago
Most unfortunate the case is prolonged for a decade in the consumer forums. Consumer forum is supposed to be fast track courts but in reality in our country totally different. Presidents of the consumer forums lethargic and not taking early decision based on credible evidence provided by both complaint party and opposite party. People lost hope on consumer forums due to undue delay in passing orders. Even compensation in time by the opposite party not guaranteed by the orders passed. It will take some more years.
ATM Fails To Dispense Cash, SBI Ordered To Refund Rs40,000 with Interest
Moneylife Digital Team 02 June 2025
In a significant ruling, the national consumer disputes redressal commission (NCDRC) has dismissed a revision petition filed by the State Bank of India (SBI) and upheld orders from lower consumer forums directing the bank to refund...
ICICI Lombard Ordered To Pay Rs3 Crore Insurance to Widow, NCDRC Condemns Misleading Home Loan Insurance Practices
Moneylife Digital Team 30 May 2025
In a significant judgement, the national consumer disputes redressal commission (NCDRC) has directed ICICI Lombard General Insurance Company Ltd to pay Rs2.99 crore along with interest to a Mumbai-based widow, holding that the insurer...
Fraud Alert: Fake Online Forms
Yogesh Sapkale, 30 May 2025
On a busy office day, Sushmita, a corporate executive, received an email in the name of her bank, asking her to update her know-your-customer (KYC) details immediately. It asked her to use a link provided in the email, or else her...
Housing Society Problems and Solutions: When Rules, Rights and Residents Collide
Shirish Shanbhag 29 May 2025
Life in a cooperative housing society (CHS/the Society) can offer a sense of community and shared responsibility, but it can also come with unique challenges. From disagreements over shared expenses to unauthorised commercial use of...
Array
Free Helpline
Legal Credit
Feedback