In Brief
The appellants held a medical insurance policy with the respondent insurer, renewed annually for years. In 2008, they renewed the policy on the belief they were continuing existing terms. The insurer, however, had introduced a new monetary cap limiting angioplasty coverage to 70% of the sum insured or ₹2,00,000, whichever was less. When the second appellant required angioplasty, the insurer paid only ₹2,00,000 out of the claimed ₹3,82,705. The Supreme Court held that the insurer breached its fundamental duty of utmost good faith by failing to inform the policy holders of this material change before renewal. Even if renewal constitutes a fresh contract, unilaterally imposing significant restrictions without prior notice violates the insurer's disclosure obligations and constitutes deficiency of service. The appeal was allowed and the lower consumer court's judgment was restored.
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