In the case of Life Insurance Corporation of India v. Rosamma Varkey, The deceased requested insurance on his own life from LIC on November 1st, 1993, and a policy was granted in his favour on February 14th, 1994 with a coverage amount of Rs. 3 lakh. He passed away from heart problems on October 7, 1995. The assured money was claimed on 10-7-1995 by the respondent, who was the nominee under her husband’s life insurance policy. The claim was rejected by LIC, who claimed that the deceased withheld crucial information about his health from the proposal and provided incorrect information, which served as the foundation for the action in the present case.
- Whether the deceased furnished false information in the proposal for a life insurance policy
- whether the assured person is released from default for insurance claim eligibility if such a form is filled out by the LIC agent
Analysis of Court Order
The Kerala High Court’s single-judge bench Sathish Ninan overturned the Trial Court’s ruling, holding that the Insurance Company was not responsible for providing false information on an insurance application and permitting a lawsuit to be filed for the sum assured under a life insurance policy issued by the Life Insurance Corporation despite the Trial Court’s view that the LIC agent who filled out the lawsuit was at fault.
The court stated that this instance involved the positive assertion of a truth that was untrue to the deceased’s knowledge, not just a simple omission of information. The Court argued that it was implausible for material facts’ to escape the proposal form’s particular query asking for information about prior treatment.
The Court concluded that whether or not an insurance policy was valid depended on whether or not there had been inaccurate information or material facts omitted. Although some medical records indicate that the deceased was admitted to the hospital in 1992 for over a week to receive treatment as an inpatient through a cardiologist, the deceased in this case denied ever being admitted to any hospital or nursing home for a general check-up, treatment, or operation. The Court interpreted this as providing misleading information to benefit from the specified policy, not just the purposeful suppression of pertinent facts. The Court decided that the LIC was exempt from liability under the disputed fake insurance policy and had the right to repudiate it since it refused to accept or countenance the argument. The Trial Court’s decree and decision were overturned by the Court.