The court noted that the petitioner did not even have the time to celebrate the birth of her twin babies and nurse them to health when she faced the “rude shock” of rejection of her legitimate claim by the insurance company.
By Vidya : The Bombay High Court has pulled up an insurance company for trying to differentiate between a full-term baby and a pre-term baby while trying to reject the insurance claim of a woman who had gone through delivery. The court has said that a new-born would mean both a full-term baby and a pre-term baby.
The court noted that the approach of the insurance company was “unreasonable, unjust and contrary to the fundamental utmost good faith ethic of an insurance policy.”
The bench of Justices Gautam Patel and Neela Gokhale directed the insurance company, New India Assurance, to pay Rs 11 lakh medical expenses incurred by a Mumbai-based woman for the treatment of her twin babies born prematurely.
They also directed the company to pay an additional sum of Rs 5 lakh to the woman for attempting to interpret clauses in its insurance policies, contrary to their true spirit, only with a view to avoiding honouring the claims.
The woman, a legal practitioner, had taken the policies in 2007 of Rs 20 lakhs and in 2018 had delivered twins who needed Neonatal Intensive Care Unit (NICU). After they were discharged, she submitted bills of Rs 11 Lakhs, which were denied on the grounds that the policy only covers new-born babies that are born full-term and not babies born pre-term.
She moved the high court in 2021, claiming that the insurance company’s refusal to accept her claims was arbitrary and contrary to the Insurance Regulatory and Development Authority of India (IRDAI) guidelines. The petition said that there was no rational classification, nor intelligible differentia between new-born and premature babies.
The company opposed the petition and said there were complications in the twins of the petitioner due to their premature birth and would not have occurred in a baby born full-term.
The bench, however, said that the insurance company’s rejection of the petitioner’s claim was “contrary to law, unreasonable and arbitrary, and liable to be set aside”.
The bench stated that, “The distinction between a ‘new-born’ and a ‘premature baby’ or a baby born ‘pre-term’ is baseless as a new-born baby can be one which is born ‘full term’ or ‘pre-term’. A full-term baby does not become more ‘newer’ any more than a ‘pre-term’ baby becomes an ‘earlier born’ or, to make it even more pointed, ‘old born.'”
The court added that the petitioner did not even have the time to celebrate the birth of her twin babies and nurse them to health when she faced the “rude shock” of rejection of her legitimate claim by the insurance company.
“The Insurance cannot be permitted to play fast and loose with the faith reposed by the insured, and that too, supported by regular renewals and payments of premiums, by attempting to interpret clauses in its policies, contrary to their true spirit and only with a view to avoid honouring claims,” the court said.
The bench therefore deemed it “fit and proper, in the interests of justice” to direct the insurance company to pay the woman an additional Rs 5 lakhs towards the cost of litigation.
