A recent ruling by the Supreme Court of India has shed light on the critical role of burden of proof in insurance claim disputes, emphasizing the necessity for insurers to substantiate allegations of policyholder misconduct with concrete evidence. 

The case revolved around a life insurance claim filed by the daughter of the deceased insured, challenging the insurer's denial based on alleged suppression of existing policies by the insured.

The Bench, comprising Justices BV Nagarathna and AG Masih, delved into the core legal principle that "he who asserts must prove," highlighting the insurer's failure to sufficiently demonstrate that the insured had indeed concealed information about prior policies during the acquisition of the new policy. This failure, according to the Court, rendered the repudiation of the insurance claim baseless and unjustified.

The insurer contended that a precedent set in Reliance Life Insurance Co Ltd vs. Rekhaben Nareshbhai Rathod, justified their repudiation based on suppression of existing policies. However, the Court meticulously distinguished the present case from Rekhaben, where an admission of suppression existed, unlike in the current scenario.

Central to the Court's analysis was Section 45 of the Insurance Act, 1938, which places the onus on insurers to prove any suppression of material facts by the insured. The Court scrutinized the evidence provided by the insurer, noting deficiencies such as incomplete and contradictory information in the tabulation of existing policies, lack of supporting documentation, and absence of testimony from other insurance companies' officers.

The Court's decision highlighted the necessity for insurers to meet a high evidentiary threshold before repudiating claims based on alleged non-disclosures. Mere assertions without substantial proof were deemed insufficient to deny rightful claims, reinforcing the principle of fairness and equity in insurance disputes.

Ultimately, the Supreme Court directed the insurer to honor the insurance claim, encompassing two policies, and instructed payment to the appellant with accrued interest. 

Case: Mahakali Sujatha v. The Branch Manager, Future Generali India Life Insurance Company Limited & Anr,

CIVIL APPEAL NO. 3821 OF 2024.

Click to read/download judgment.