Tata AIG ordered to pay over ₹60,000 after rejecting policyholder's ₹40,246 health insurance claim

Insurance companies cannot reject health insurance claims based on assumptions without proving that a policyholder deliberately concealed a pre-existing illness, the District Consumer Disputes Redressal Commission (DCDRC) in Karnal has ruled while directing Tata AIG General Insurance Company Ltd. to pay more than ₹60,000 to a customer whose mediclaim was denied.

In its order dated June 23, 2026, the commission directed the insurer to reimburse ₹40,246 towards the medical claim, pay interest at 9% per annum from the date of repudiation until payment, and pay ₹20,000 towards mental agony, harassment and litigation expenses. The commission also made strong observations against insurers, saying some appear to be “only interested in earning the premiums” while leaving policyholders to fight lengthy legal battles for genuine claims.

How the dispute began

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

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According to the complaint, Bhag Singh slipped and fell on the stairs of his house on August 5, 2022, suffering multiple injuries to his right leg and knee.

He was admitted to Virk Hospital Pvt. Ltd., Karnal, where he underwent surgery. According to the complaint, he spent nearly ₹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, the insurer rejected the claim despite repeated requests.

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 Tata AIG rejected the 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 said Bhag Singh had allegedly declared while purchasing the policy that he did not suffer from any disorder. During claim processing, Tata AIG sought a polio disability certificate and later rejected 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 Tata AIG, the alleged non-disclosure entitled it to cancel the policy and reject the reimbursement claim.

Policyholder says claim was for an accident, not a pre-existing illness

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 the necessary documents required for reimbursement. According to him, Tata AIG rejected the claim on false and frivolous grounds despite the treatment being genuine and covered under the policy.

Commission finds insurer failed to prove concealment

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.

It noted that the insurer’s entire case rested on treatment records from Virk Hospital. However, those records did not specify the duration of the alleged history of polio residual paralysis.

Medical records had no evidentiary value

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

It further observed 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 criticises insurers over claim rejections

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 observations made earlier by the Punjab and Haryana High Court, which said: “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 the reimbursement amount was reduced

Bhag Singh had sought reimbursement of nearly ₹45,000.

However, the commission found that the medical bills placed on record totalled ₹40,246. It also noted that Bhag Singh himself had submitted a reimbursement claim of ₹40,246 before the insurer.

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

What the commission ordered

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

• Pay Bhag Singh ₹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 ₹20,000 towards mental agony, harassment and litigation expenses.