Prior Knowledge About Disease Not Disclosed: NCDRC Allows LIC Appeal, Directs State Commission To Consider Afresh

The National Consumer Disputes Redressal Commission (NCDRC) has allowed an appeal by the Life Insurance Corporation of India (LIC), setting aside a State Commission order and remanding the case for fresh consideration. The case involved the repudiation of a death claim on the grounds that the deceased policyholder had failed to disclose a pre-existing disease at the time of taking the policy. The NCDRC upheld the principle of 'uberrimae fidei' (utmost good faith), which is fundamental to insurance contracts. It emphasized that the insured has a solemn duty to disclose all material facts accurately. Failure to do so, especially concerning health conditions, can vitiate the contract and justify the insurer's decision to reject the claim. The commission's decision to send the matter back for reconsideration underscores the critical importance of full and frank disclosure by individuals seeking insurance coverage, reinforcing the insurer's right to repudiate claims based on material non-disclosure.