Suppression of facts by insured renders policy void

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In a recent judgment in the Reliance Life Insurance Ltd v Rekhaben Nareshbhai Rathod case, the Supreme Court dealt extensively with the disclosure obligations of the insured and held that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered a breach of the duty of good faith and will render the policy voidable by the insurer.

In the case, the insurance company (the appellant) issued a life insurance policy to the husband of the respondent in 2009 based on the disclosures contained in the proposal form. After the death of the policyholder in 2010, the respondent, the nominee under the policy, submitted a claim of 1 million (US$14300) in 2011 along with medical certificates stating that the deceased suffered a sudden chest pain prior to his death.

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The dispute digest is compiled by Bhasin & Co, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in. Readers should not act on the basis of this information without seeking professional legal advice.

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