“Govt Circular Can’t Curtail Insurance Coverage, Orders Insurer To Pay Balance COVID-19 Claim”: Delhi HC

The Delhi High Court has clarified that a government circular issued during the COVID-19 pandemic to regulate hospital charges can’t be used by insurance companies to limit their contractual liability towards policyholders.

Justice Sachin Datta, delivering the ruling, directed United India Insurance Company Limited to release the balance claim amount to petitioner Reena Goel, whose COVID-19 hospitalisation expenses were only partly reimbursed despite being within her coverage limit.

“The non-release of the deficit amount is clearly unjustified and contrary to the clarification/s issued by IRDAI,” the court observed.

The dispute arose from a June 20, 2020, circular issued by the Delhi government that capped charges for COVID-19 treatment in hospitals. Justice Datta made it clear that the circular was intended to regulate hospital billing practices, not to reduce reimbursements under valid insurance policies.

The court further highlighted that the Insurance Regulatory and Development Authority of India (IRDAI) had already clarified the issue through circulars in January and April 2021, making it clear that such caps could not override contractual obligations of insurers.

Case Background

Goel was admitted to the hospital between December 4 and December 18, 2020, incurring expenses of ₹3,56,295. She was covered under a ₹3 lakh base policy and an additional ₹3 lakh Super Top Up Medicare Policy.

Despite this, United India Insurance reimbursed only ₹1,75,340, citing the Delhi government’s circular as justification for the reduced payout.

Her counsel — advocates Rakshita Goyal, Sanyam Gupta, Aditya Goel, Anju Bhushan Gupta, and Ankita Chaudhary — argued that the insurer’s stand was arbitrary and contrary to IRDAI directions. Representing IRDAI (respondent no. 2) were advocates Abhishek Nanda, Hrishika Rawat, and Sourabh Singh.

Court’s Findings

The court found that the insurer’s reliance on the Delhi government circular was unjustified and inconsistent with both IRDAI’s clarifications and the company’s past conduct in similar cases.

Holding the insurer accountable, the court directed United India Insurance to release the remaining claim amount within 4 weeks.

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