Suppression Of Material Information By Assured At Time Of Availing Policy Entitles Insurance Company To Repudiate Such Claim: Kerala HC

Highlighting that the proposer had made a false declaration with the Defendant in the proposal form or had suppressed material facts in the proposal form, the Kerala High Court held that the Insurance Company is not liable under the policy in question and is entitled to repudiate it.

A Single Judge Bench of Justice Sathish Ninan observed that “A contract of insurance is a contract uberrima fidei meaning, “of utmost good faith”. The law regarding insurance contracts, the consequence of furnishing false information and suppression of material information by the assured at the time of availing the policy, is too well settled”.

Advocate R.S Kalkura appeared for the Appellant, whereas Advocate C.P Ravikumar appeared for the Respondent.

In a brief background, present appeal has been preferred seeking to set aside order whereby the Trial court had ordered Insurance company (Appellants-Plaintiff) to pay the assured amount to the Respondents-Defendant. It was contended by the Appellants that at the time the deceased availed the insurance policy, he suppressed a material fact which makes the policy invalid. The Trial Court however granted the decree in favour of the Appellant on the ground that the form was filled by the employee of the Respondent.

After considering the evidence and referring to the decision of United India Insurance Co. Ltd. v. MKJ Corporation [1996(6) SCC 428], the Bench reiterated that the information provided by a proposer/insured at the time of giving proposal are mostly matters within his knowledge in exclusion to the insurer, and based on such details an insurance company decides to issue a policy on the life and fixes the premium payable.

While stating that all material facts within the knowledge of the proposer are matters to be disclosed while submitting the proposal, the Bench observed that the health condition of the proposer/assured is a factor relevant for the insurer to decide upon whether to assure on the life or in arriving at the quantum of premium payable.

Highlighting a para 11(b) of the proposer form of the Appellant company in which it was asked whether the proposer/assured was admitted to a hospital for treatment or operation, to which the proper explicitly answered ‘no’, the High Court held that the case at hand is not one of mere omission to furnish material facts but is one of positive assertion of a fact which to the knowledge of the proposer/insured was, incorrect.

Hence, the High Court set aside the judgment of the Trial Court and allowed the appeal.

Cause Title: Zonal Manager, Life Insurance Corporation of India and Ors. v. Smt. Rosamma Varkey, w/o Late P.I. Varkey

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