Law: Insurance Ordinance, 2000

Section: 75

Insurance Ordinance (XXXIX of 2000)--- ----S. 75---Life insurance policy---Duty of utmost good faith on part of insured---Scope---Insured mentioning in his insurance application that he never had heart disease, when in fact he had undergone heart surgery prior to signing up for the policy---Whether it was a deliberate concealment of a material fact known to the insured and, hence, breach of the duty of utmost good faith, which allowed the insurance-company to avoid the contract---Held, that insurance company did not merely rely on the answers given by the insured in his Personal Statement of Health---Insured was also thoroughly medically examined by a doctor of the insurance companys own choice, and said report gave the insured a clean chit by stating that his coronary state was perfectly normal---Insurance company was induced to issue the life insurance policy not on account of the statements made by the insured, rather, it was the examination by the insurance companys own medical examiner and his report that was clearly the most important factor, and instrumental in inducing the insurance company to go forward in the matter---Furthermore, the industry custom and practice uniformly followed was that insurers in the life insurance business did not issue policies without a thorough medical examination of the person proposed to be insured, and unless the resultant medical report was found satisfactory or acceptable---If therefore the medical examiner chosen by the insurer was negligent or the Standard Operating Procedures (SOPs) established for the examination (again, by the insurer) were so lax as to fail to result in a properly thorough examination, the burden of that fault laid on the insurer---In such a situation the insured could not be held to account for any non-disclosure such as would enable the insurer to escape liability on the policy unless there was fraud or a fraudulent misrepresentation---Nothing was available on record to show that the non-disclosure by the insured (i.e., his answer to having history of heart disease) was fraudulent---Fora below had righty decreed the claim of the legal heirs of insured to the extent of the insured amount---Appeal…

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