Mumbai : The Bombay High Court has refused to interfere with an insurance Ombudsman’s order in favour of a leukaemia patient whose hospitalization ran across two consecutive policy periods. Justice Milind Sathaye dismissed National Insurance Company’s challenge, finding nothing perverse in the Ombudsman’s decision.
The patient was hospitalized from October to December 2008. The first policy ran from November 2007 to November 2008, and a second policy took effect in November 2008, so the treatment spanned both. The insurer tried to reject the later part of the claim on the ground that the patient had been admitted before the second policy began.
The Ombudsman directed the insurer to pay 50 per cent of the balance claim as an ex gratia amount. The High Court let that direction stand.
What the ruling does and does not say : The court did not lay down a blanket rule that insurers must pay every claim spanning more than one policy. It upheld the Ombudsman’s findings on the facts of this case. Insurance disputes depend heavily on policy wording and circumstances.
Takeaway for policyholders : A claim does not automatically lapse because one policy ends while treatment is ongoing and another begins. The ruling also shows the value of the insurance Ombudsman as a quicker forum for policyholders than regular litigation. Insurers cannot use technical arguments to defeat the cover a customer has paid for when the adjudicating forum finds their position untenable.
For students of contract and insurance law, the case raises questions about how successive contracts are interpreted and how continuity of risk is handled, and about why clauses on commencement and renewal can decide the outcome of a claim.
