₹1cr claim denied over income inflation; why wife won

The District Consumer Disputes Redressal Commission in Kurnool ruled that an insurer does not have the right to reject a policyholder's Rs 1 crore accidental death claim simply because the policyholder allegedly inflated their income while purchasing the policy. The claimant's husband passed away in a road accident, and his widow filed a claim for the assured sum of Rs 1 crore. However, the insurer, HDFC ERGO, rejected the claim, alleging that the deceased had inflated his income.

The insurer based its decision on an alleged statement from the deceased's son, suggesting that the deceased's income was inflated to qualify for the higher sum assured. The insurance company also pointed to discrepancies in bank statements and a declaration from the deceased's wife. The insurer relied on Clause 7 of Section C of the policy, which allows for forfeiture of benefits and premiums if a claim involves fraud, false statements, or fraudulent means.

However, the consumer commission found that the insurer did not provide sufficient evidence to prove deliberate and material misrepresentation. The commission observed that the accident and the deceased's death were conclusively established through various official records. The insurer failed to prove that the income figure was knowingly false or deliberately inflated, and that the alleged misrepresentation was material to the insurance contract.

The commission noted several gaps in the insurer's evidence, including the failure to establish the deceased's actual income, the extent of the alleged inflation, and the precise underwriting consequence if a different income had been disclosed. The insurer also did not prove that documentary proof of income was required at the time of policy underwriting, nor did they show that the alleged income discrepancy would have resulted in the proposal's rejection or materially changed the policy terms.