Insurance companies can not time-restrict filing of insurance claims, the Bombay High Court has ruled in a case involving United India Insurance Company.
The court ruled that time restrictions on the submission of insurance claims are contrary to law and ordered the Company to clear health insurance claims of a city resident and his wife, totalling Rs 1.13 lakh.
The company had rejected the claim because it was submitted after the expiry of the stipulated 90-day window post hospitalisation.
However, a bench of Justices Bharati Dangre and Manjusha Deshpande held that the policy term extinguishing the rights of the insured on expiry of a period was contrary to Section 28(b) of the Indian Contract Act and therefore void.
The petitioner, C.P. Ravindranath Menon, had availed a group health insurance cover through his employer, Export-Import Bank of India.
On May 24, 2022, he had, through the bank, submitted four insurance claims for himself and his wife for distinct periods, totalling Rs 1.13 lakh.
The insurance company, however, declined to process the claims, saying they were time-barred, prompting Menon to approach the high court.
In his petition, Menon cited a 2022 Supreme Court decision in the Oriental Insurance Company case. The apex court had found the condition of a timeline in lodging an insurance claim to be contrary to Section 28(b) of the Indian Contract Act, 1872, and therefore void.
The insurance firm contested the plea, claiming the apex court decision was based on specific facts and could not be applied to this case.
It argued that the policy was a contract and the petitioner was bound by its terms, including the clause that denied reimbursement if claims were submitted beyond 90 days.
The high court, however, said that while contracts must be honoured, they are still governed by the Indian Contract Act.
It held that any clause extinguishing rights due to expiry of a specified period is void to that extent.
