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When in doubt, pay in full, forum tells insurer

If there is any ambiguity in the terms of an insurance policy, the benefit should go to the consumer, a consumer forum here has ruled, asking an insurance company to pay the entire medical claim amount to a man who underwent a surgery.

Manicklal Rathi, 69, took a mediclaim policy from National Insurance Company Ltd at an annual premium of Rs 28,000 under which he was covered up to a medical expenditure of Rs 4 lakh. Rathi, who had a policy for Rs 2 lakh since 2000, enhanced the cover to Rs 4 lakh in February 2010. Two months later, he underwent a knee replacement surgery, incurring an expenditure of Rs 2.69 lakh.

However, the company did not settle the full amount and withheld Rs 79,131. The company did not respond to his representations, prompting him to approach the Consumer Protection Council, Tamil Nadu, which filed a complaint on his behalf at the district consumer disputes redressal forum, Chennai (North).

In its reply, the company said according to the terms of the policy, it could not reimburse the entire amount during the initial four years of the policy period. Further, it argued, Rathi had "already submitted a discharge voucher" for the sum he received and hence cannot stake claim for more.

Rathi's counsel S Pushpavanam, citing a Supreme Court verdict, said executing a discharge voucher cannot absolve an insurance company of its liability. Such a voucher could have been obtained through fraud or misrepresentation, he said. The company had provided "highly ambiguous" terms and conditions and there was no documentary evidence to prove that while issuing the policy, it had explained the terms to Rathi, Pushpavanam said.

Quashing the company's arguments as "unsustainable" recently, the bench comprising president R Mohandoss and member T Kalaiyarasi found it guilty of negligence and deficiency in services. It directed the company to reimburse Rs 79,131 along with an interest of 9%. The forum also slapped a fine of Rs 5,000 on the company for deficiency in services and awarded Rathi another Rs 2,000 as case costs.

 Article referred: http://timesofindia.indiatimes.com/india/When-in-doubt-pay-in-full-forum-tells-insurer/articleshow/31810848.cms

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