He District Consumer Disputes Redressal Commission, Thrissur, comprising CT Sabu (Chairman), Sreeja S. (Member) and Ram Mohan R. (Member), held Star Health and Allied Insurance Company Ltd. liable for deficiency in service by rejecting a COVID-19 insurance claim for lack of duration of hospitalization.
The Commission held that the repudiation of the claim based solely on a shortfall of approximately 2.5 hours in relation to the stipulated 72-hour hospitalization requirement was arbitrary, unreasonable and legally unsustainable.
Brief facts
The complainant, Robin AK, had purchased a “Corona Rakshak Policy” from Star Health and Allied Insurance Company Ltd, with an assured sum of Rs 100,000. The policy was valid from July 31, 2020 to May 12, 2021 and provided a lump sum benefit upon a positive COVID-19 diagnosis requiring a minimum of 72 hours continuous hospitalization.
During the policy period, the claimant tested positive for COVID-19 and was admitted to the hospital on October 16, 2020 and discharged on October 19, 2020. He subsequently filed a claim for the insured amount.
The insurance company rejected the claim on the grounds that the plaintiff had been hospitalized for almost 70 hours, which was less than the minimum requirement of 72 hours stipulated in the policy conditions.
Annoyed, the complainant approached the Commission alleging deficiencies in the service.
Insurer’s Arguments:
The insurer admitted the issuance of the policy and the plaintiff’s COVID-19 diagnosis, but justified the denial based on the terms and conditions of the policy requiring a minimum hospitalization of 72 hours for claim admissibility.
Observations and Decision:
The Commission observed that the complainant had tested positive for COVID-19 and was hospitalized during the policy period, thereby fulfilling the central objective of the policy.
He argued that the shortfall of approximately 2.5 hours of the required 72 hours of hospitalization was minor and could not be treated as a fundamental violation. The Commission emphasized that policy terms should not be applied in a hypertechnical manner that defeats their purpose and that insurers must act fairly.
Consequently, the rejection of the claim was considered arbitrary and unsustainable. The suit was allowed, directing the opposite parties to pay ₹100,000 as assured amount, ₹10,000 as compensation and ₹5,000 as litigation costs, along with 9% interest from the date of filing to realization.
Case Title: Robin AK v Star Health and Allied Insurance Company Ltd.
Case No.: CC 159/21
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