Bilaspur Consumer Commission Orders Insurer To Pay Rs 1 Crore With Interest For Wrongful Claim Rejection
The insurer rejected the claim, alleging that the insured had concealed pre-existing illnesses while purchasing the policy.
Published : January 20, 2026 at 9:47 PM IST
Bilaspur: In a significant ruling, the District Consumer Disputes Redressal Commission, Bilaspur, has held an insurance company guilty of deficiency in service and directed it to pay the full insured amount along with interest to the consumer.
The case relates to Bilaspur resident Kaushal Prasad Kaushik, who had purchased a life insurance policy in the name of his wife, the late Shail Kaushik. The policy, which came into effect on May 27, 2020, carried an annual premium of Rs 10 lakh, which was paid regularly.
Before issuing the policy, the insurance company conducted a medical examination of the insured woman and declared her to be in good health. However, on September 21, 2020, Shail Kaushik tested positive for Covid-19 and was admitted to Apollo Hospital in Bilaspur. She died during treatment on October 11, 2020.
After his wife’s death, Kaushal Prasad Kaushik submitted a death claim to the insurance company along with all required documents. The insurer rejected the claim, alleging that the insured had concealed pre-existing illnesses while purchasing the policy. The company claimed she was suffering from ailments such as heart disease and diabetes prior to taking the insurance.
During the hearing, the insurance company failed to produce any documentary evidence to support its claim. On the other hand, the complainant argued that the insurer had conducted medical examinations twice before issuing the policy and no serious illness was detected at that time. It was also stated that the cause of death was Covid-19 infection.
Alok Kumar Pandey, Member of the District Consumer Disputes Redressal Commission, said the insurer could not prove that the insured woman was suffering from any serious disease before the policy was issued.
After hearing arguments from both sides, the Consumer Commission held that the insurance company failed to establish the presence of any pre-existing serious illness prior to the issuance of the policy. The commission observed that rejecting the claim without concrete evidence amounted to deficiency in service.
The commission directed the insurance company to pay the insured amount of Rs 1 crore to the complainant with 12 per cent annual interest. In addition, the insurer has been ordered to pay Rs 2 lakh towards compensation for mental harassment and litigation expenses.
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