Unravelling the Implications of Estoppel and Waiver in Claims Settlement

The insured later opted for a robotic surgery. However, robotic surgery was not covered under the policy, and the insurer later denied the claim based on this policy exclusion. The insured or policyholder can invoke estoppel to prevent the denial of the claim based on the assurance given by the agent.

- Dr Abhijit K. Chattoraj Chartered Insurer

Imagine a scenario where you have been paying mediclaim premium year after year without any break in the continuity of the cover, and also without ever making a claim. You are reminded at the time of each renewal that, in the event you incur medical expenses arising from a disease, the insurance company will honour its commitment to pay the medical expenses as covered under the policy. However, last year, a family member of yours unexpectedly needed hospitalisation, and you approached the insurance company through your agent to submit the claim. The insurance company denies the claim, leaving you in a state of mental distress and disbelief and of course, in great financial misery. Are you aware that a concept called estoppel can sometimes come to your rescue?

Estoppel is a legal principle that protects the interests of policyholders, preventing insurance companies from reneging on their promises.

1. The Fundamentals of Estoppel

It is worth noting that estoppel is a powerful legal principle that allows policyholders to prevent insurers from denying claims under certain conditions. The right an insured gets when an insurer or its agents makes a representation or promise to the insured, and the insured relies on that representation or promise to their detriment. In such cases, the insurer may be estopped from denying the claim, even if the terms of the insurance policy do not explicitly state that the loss is covered. For example, if an insurance agent verbally assures a policyholder (medical insurance) that all types of advanced surgeries are covered under their policy, and the policyholder reasonably relies on that assurance.