Insurers can deny health claims for alcohol-related hospitalisation
New Delhi, Mar 28, 2025
Health insurance applicants should be transparent and disclose medical history and lifestyle choices, say experts
The Supreme Court has ruled that insurers can deny health insurance claims if a customer had not explicitly disclosed their alcoholism at the time of purchasing a policy.
“This judgment serves as a wake-up call in the insurance ecosystem. The principle of utmost good faith will bind both the insurer and the insurer. Non-disclosure could give the insurer a ground to repudiate the claim, when the claim is arising out of alcohol consumption,” said Alay Razvi, managing partner, Accord Juris.
What is the case
The case involved a man who bought a policy called Jeevan Arogya from Life Insurance Corporation of India (LIC) in 2013. While completing his application, he did not disclose his long-term heavy alcohol consumption. Less than a year after purchasing the policy, he was hospitalised in Jhajjar, Haryana, due to severe stomach pain. Following a month of treatment, he suffered a fatal heart attack.
After his death, his wife submitted a claim for medical expenses under the policy. However, LIC rejected it, citing the man’s failure to disclose his alcoholism. The insurer maintained that the policy explicitly excludes coverage for ‘self-inflicted diseases” and “complications caused by excessive alcohol consumption”. Since the man had falsely stated that he did not drink, LIC declared the claim invalid.
“Insurers typically assess medical records for past alcohol-related conditions, examine the cause of hospitalisation to determine if alcohol played a role, and refer to policy terms to see if alcohol-related illnesses are explicitly excluded. We believe that if occasional drinking had no impact on the claimed illness, the insurer may not have valid grounds for rejection. However, if drinking, however infrequent, worsened a pre-existing condition or was a factor in hospitalisation, the claim could still be denied,” said Aslam Ahmed, Partner, Singhania & Co.
“To avoid such issues, it is advisable to the prospective health insurance applicants that they be transparent and provide all the requisite information, including but not limited to medical history and lifestyle choices, as adopting the practice of full disclosure would benefit the policy holders, in situations of an untoward event,” said Shivam Chowdhury, advocate, Delhi High Court.
[The Business Standard]
