Tata AIG rejects mediclaim saying policyholder hid a disease: Court says 'insurance companies are only interested in premiums'; orders insurer to pay over Rs 60K

The District Consumer Disputes Redressal Commission (DCDRC), Karnal, Haryana, has directed Tata AIG General Insurance Company Ltd. to reimburse a policyholder's rejected mediclaim, holding that the insurer failed to prove its allegation that the customer had concealed a pre-existing illness while purchasing the policy.

In its order dated June 23, 2026, the commission directed Tata AIG to pay Rs 40,246 towards the medical claim along with 9% annual interest from the date of repudiation and Rs 20,000 as compensation for mental agony, harassment and litigation expenses.

While deciding the case, the commission also made strong observations against insurance companies, stating that many insurers appear to be "only interested in earning the premiums" while forcing policyholders to fight lengthy legal battles to obtain genuine claims.

How did the dispute begin?

According to the complaint, Bhag Singh, a resident of Karnal district in Haryana, had purchased a Group Medicare Health Insurance Policy from Tata AIG through Axis Bank on January 7, 2020, with a sum insured of Rs 5 lakh after paying a premium of Rs 7,605. The policy was later renewed for the period between January 7, 2022 and January 6, 2023.

On August 5, 2022, Bhag Singh allegedly slipped and fell on the stairs of his house around 10 am, suffering multiple serious injuries to his right leg and knee.

He was admitted to Virk Hospital Pvt. Ltd., Karnal, where doctors operated on his injured leg. According to the complaint, he spent nearly Rs 45,000 on surgery, hospitalisation and other medical expenses.

After being discharged, Bhag Singh submitted all the required documents to Tata AIG seeking reimbursement under his health insurance policy.

However, despite repeated requests, the insurer rejected his claim.

Alleging deficiency in service and unfair trade practice, Bhag Singh approached the consumer commission seeking reimbursement of his treatment expenses along with compensation for the hardship caused by the rejection.

Why did Tata AIG reject the insurance claim?

Before the commission, Tata AIG argued that while processing the reimbursement claim, it found that Bhag Singh had a history of polio residual paralysis, which, according to the insurer, existed even before the policy was first issued in January 2020.

The insurer stated that while purchasing the policy, Bhag Singh had allegedly declared that he did not suffer from any disorder.

During claim processing, Tata AIG sought a polio disability certificate and later repudiated the claim through a letter dated September 5, 2022.

The rejection letter stated: "As per the scrutiny of the documents member is having history of polio residual paralysis, which is prior to policy inception... The same has not been disclosed in proposal form. Hence, your policy is being cancelled and we regret to inform you that your claim is repudiated under non-disclosure section 4(7)(i)."

According to the insurer, the alleged non-disclosure entitled it to cancel the policy and reject the reimbursement claim.

What did Bhag Singh argue?

Bhag Singh maintained that his claim arose because of an accidental fall during the validity of the policy and not because of any pre-existing disease.

He argued that after his treatment at Virk Hospital, he had submitted all necessary documents required for reimbursement.

According to him, Tata AIG rejected the claim on false and frivolous grounds despite the treatment being genuine and fully covered under the policy.

Why did the consumer court rule against Tata AIG?

After examining the evidence, the commission found that Tata AIG had failed to establish its allegation that Bhag Singh had deliberately concealed a pre-existing illness.

The commission noted that the insurer's entire case rested on treatment records from Virk Hospital.

However, it observed that those records did not specify the duration of the alleged history of polio residual paralysis.

More importantly, the commission pointed out that the treatment record relied upon by Tata AIG was merely a photocopy.

It further noted that the insurer neither examined the doctor who prepared the medical record nor filed the doctor's affidavit to prove the contents of the document.

Because of these deficiencies, the commission held that the medical record carried no evidentiary value in law.

According to the order, Tata AIG had effectively rejected the claim merely on assumptions and presumptions rather than on legally admissible evidence.

The commission also relied upon previous rulings of the National Consumer Disputes Redressal Commission (NCDRC), which held that insurers cannot rely upon unproved photocopies of medical records without examining the treating doctor to establish concealment of disease.

Consumer court's sharp observations on insurance companies

While allowing the complaint, the commission criticised what it described as a growing tendency among insurance companies to deny genuine claims.

The order observed: "Nowadays it has become a trend of insurance companies, they issue the policies by giving false assurances and when insured amount is claimed, they make such type of excuses."

The commission also reproduced strong observations made earlier by the Punjab and Haryana High Court: "It seems that the Insurance Companies are only interested in earning the premiums which are rather too stiff nowadays, but are not keen and are found to be evasive to discharge their liability."

The High Court had further observed that insurance companies often compel affected consumers to fight prolonged legal battles to recover legitimate claims by relying upon technical clauses contained in insurance contracts.

Agreeing with those observations, the commission concluded that Tata AIG's repudiation of Bhag Singh's claim amounted to both deficiency in service and unfair trade practice.

Why did the commission reduce the claim amount?

Bhag Singh had sought reimbursement of Rs 45,000.

However, the commission found that the medical bills placed on record totalled Rs 40,246.

It also noted that Bhag Singh himself had submitted a reimbursement claim of Rs 40,246 before the insurer.

Accordingly, the commission restricted the reimbursement to the actual documented amount.

What did the consumer court order?

Allowing the complaint, the District Consumer Disputes Redressal Commission directed Tata AIG to:

• Pay Bhag Singh Rs 40,246 towards his medical expenses.
• Pay interest at 9% per annum on the amount from September 5, 2022, the date the claim was repudiated, until payment.
• Pay Rs 20,000 towards mental agony, harassment and litigation expenses.

The insurer has also been directed to comply with the order within 45 days from receiving a copy of the judgment.

The complaint against Axis Bank, which had been impleaded as the second opposite party, was dismissed.

Check the case judgement here: