Newborn Can Mean Full-Term And Pre-Term Baby: High Court On Insurance

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A new born would mean both a full-term baby and a pre-term baby, the Bombay High Court on Wednesday said while directing an insurance company to pay ₹ 11 lakh medical expenses incurred by a woman from Mumbai for the treatment of her twin babies born premature.
A division bench of Justices Gautam Patel and Neela Gokhale also directed the New India Assurance company to pay an additional sum of ₹ five lakh to the woman for attempting to interpret clauses in its insurance policies, contrary to their true spirit, only with a view to avoid honouring claims.

The court noted the approach of the insurance company was “unreasonable, unjust and contrary to the fundamental utmost good faith ethic of an insurance policy”.

“These submissions are the sheerest casuistry. They cannot be allowed to succeed,” the HC said.

The woman, a legal practitioner, moved the HC in 2021 after the insurance company refused her claims on the ground that the policy only covers new born babies who are born full-term and not babies born pre-term.

The woman in her plea said the insurance company’s refusal to accept her claims was arbitrary and contrary to the Insurance Regulatory And Development Authority of India (IRDAI) guidelines.

The petition said there was no rational classification, nor intelligible differentia between new-born and premature babies.

The insurance company opposed the petition and said the petitioner’s twins developed complications due to their premature birth and would not have occurred in a baby born full-term.

The bench, however, refused to accept this argument and said the insurance company’s rejection of the petitioner’s claim was “contrary to law, unreasonable and arbitrary, and liable to be set aside”.

“The distinction between a ‘new-born’ and a ‘premature baby’ or a baby born ‘pre-term’ is baseless as a new-born baby can be one that is born ‘full term’ or ‘pre-term’. A full term baby does not become more ‘newer’ any more than a ‘pre-term’ baby becomes an ‘earlier born’ or, to make it even more pointed, ‘old born’,” the court said.

The bench noted that it has taken the petitioner, a young mother and professional, considerable trials and tribulations and the roller coaster litigation process to bring the matter to its logical conclusion.

“The aim of reposing faith in the insurance company is pre-eminently to guard/provide against dangers which beset human life and dealings, by agreeing to pay the consideration in the form of premiums, as per the terms of the policy,” it said.

The court said the petitioner did not even have the time to revel in the birth of her twin babies and nurse them to health when she faced the “rude shock” of rejection of her legitimate claim by the insurance company.

“The insurance company cannot be permitted to play fast and loose with the faith reposed by the insured, and that too, supported by regular renewals and payments of premium, by attempting to interpret clauses in its policies, contrary to their true spirit and only with a view to avoid honouring claims,” it said.

The bench said it deemed it “fit and proper, in the interests of justice” and directed the insurance company to pay the woman an additional ₹ five lakh as the cost of litigation.

All the amount would have to be paid within a period of four weeks, the court said.

As per the plea, the woman had in 2007 taken two mediclaim policies for ₹ 20 lakhs from the New India Assurance Company which were renewed periodically.

In September 2018, the woman delivered twin baby boys at 30 weeks’ gestation in an emergency Caesarean surgery. The babies were premature and had to be admitted to the NeoNatal Intensive Care Unit for life-saving treatment.

After their discharge, the petitioner submitted a claim to the insurance company and claimed ₹ 11 lakh for the expenses incurred by her.

However, the company repudiated her claims.

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