An insurance company has been directed by the Rajkot District Consumer Disputes Redressal Commission to pay Rs 18 lakh into the loan account of a credit insurance holder, ruling that the refusal to honour the claim constituted a deficiency in service.
The case was initiated by Rudi Ratadiya, whose husband, Kadva Ratadiya, had taken a home loan and purchased credit insurance to safeguard his family from repayment obligations in the event of his sudden death.
The insurance policy provided a sum assured of Rs 18 lakh.
Kadva Ratadiya’s health deteriorated on January 27, 2023, and he passed away on January 30, 2023, in the hospital at the age of 50.
Following his death, Rudi Ratadiya requested the insurance company to settle the outstanding loan. However, the insurer rejected the claim, alleging that Kadva Ratadiya had concealed information about pre-existing diseases, specifically diabetes and cardiac allograft vasculopathy (CAV), when he obtained the policy in 2016.
The company based its defence on an internal investigation but failed to submit the original investigation report or an affidavit in support of its claim.
The court observed that the insurer’s argument relied on medical admission papers, but it was noted that Kadva Ratadiya had been unconscious upon hospital admission. The insurance company did not establish who had provided the medical history cited in their defence.
Advocate Sagar Rathod, who represented the petitioner alongside Hardika Vyas, stated, “The court noted that the cause of death was sudden cardiac arrest and not diabetes or brain stroke. Even if it were considered that the insured had a pre-existing disease, it was not proven that it caused his death.”
In its order dated February 20, the Commission instructed the insurer to deposit Rs 18 lakh with 6% interest, calculated from the date of petition filing, into the loan account of the deceased. Any remaining amount after settling the loan is to be paid to Rudi Ratadiya within two months.
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