HC orders Tata AIG to pay Rs 27 lakh to widow after rejecting housing loan insurance claim of her late husband

The Bombay High Court has ordered Tata AIG General Insurance to pay Rs 27 lakh along with interest to a widow within four weeks. The payout was awarded by the insurance ombudsman and relates to an insurance policy linked to a housing loan taken by her late husband, a TOI report stated.

Justice Sandeep Marne, on September 3, dismissed Tata AIG’s appeal. "The very objective of availing the insurance policy was to secure repayment of loan in the event of death or incapacitation of the borrower … . However, this noble objective is completely frustrated on account of the actions of the petitioner-insurance company. It has attempted to wriggle out of the obligation to disburse the claim amount ... ," he said.

Background of the case

In June 2017, India Infoline Housing Finance Ltd (IIFL) sanctioned a loan of Rs 27 lakh to the woman’s husband, making insurance compulsory. On April 15, 2021, he suffered a severe cardiac arrest in hospital and died within 15 to 20 minutes.


Tata AIG initially rejected the claim in October 2021, citing lack of medical documents proving death due to a critical illness covered under the policy. In November 2021, the widow submitted a letter from her husband’s treating doctor confirming a heart attack. The insurance ombudsman directed Tata AIG in November 2022 to pay the full Rs 27 lakh.

Dispute over cause of death

The widow’s advocate said IIFL had taken symbolic possession of the flat due to non-repayment of the loan. Tata AIG’s advocate argued that its panel doctor reviewed the papers and concluded that the treatment was for infection and Covid-19, not a heart attack.

Justice Marne noted that the treating doctor had stated death occurred within minutes of chest pain, leaving no time for diagnostic tests. The ombudsman had found that breathlessness and chest pain were symptoms of a heart attack, making the claim valid.

The judge added, "Even if it is believed the insured was treated for Covid and sepsis infection, it was not impossible for the insured to suffer a cardiac arrest." He said the panel doctor’s report, based only on paper review, "cannot be blindly accepted," and the opinion of the doctor who treated the insured was crucial.

Justice Marne refused to overturn the ombudsman’s order. He noted that while the court could have imposed costs on Tata AIG for making the widow litigate for four years, the ombudsman had already awarded interest at the applicable bank rate plus 2% from the date of claim rejection until payment.