Bombay HC To Insurance Company: Newborn Mean Both Full-Term And Pre-Term Baby

The Bombay High Court recently noted that a new born would mean both a full-term and a pre-term baby.

The court made the observation while directing an insurance company to pay Rs 11 lakh medical expenses incurred by a woman from Mumbai for the treatment of her twin babies born premature.

A division bench of Justice Gautam Patel and Justice Neela Gokhale directed the New India Assurance company to pay an additional sum of Rs 5 lakhs to the woman for attempting to interpret clauses in its insurance policies, contrary to their true spirit, only with a view to avoid honouring claims.

The court noted that the petitioner (the mother of the twins and also a legal practitioner) did not even have the time to celebrate the birth of her twin babies and nurse them to health when she faced the “rude shock” of rejection of her legitimate claim by the insurance company.

According to the petition, there is no meaningful classification or discernible distinction between new-born and preterm babies.

The insurance company challenged the petition, claiming that difficulties in the petitioner’s twins were caused by their early birth and would not have occurred in a full-term kid.

In 2007, the petitioner acquired Rs 20 lakh policies and in 2018 gave birth to twins who need Neonatal Intensive Care Unit care (NICU).

After they were discharged, she submitted bills totaling Rs 11 lakhs, which were denied on the grounds that the policy only covers full-term newborns and not pre-term babies.

In 2021, she filed a petition in the Supreme Court, saying that the insurance company’s rejection to accept her claims was arbitrary and violated the Insurance Regulatory and Development Authority of India’s (IRDAI) norms.

The insurance company opposed the petition and said the petitioner’s twins developed complications due to their premature birth and would not have occurred in a baby born full-term.

The bench, however, said that the insurance company’s rejection of the petitioner’s claim was “contrary to law, unreasonable and arbitrary, and liable to be set aside”.

“The Insurance cannot be permitted to play fast and loose with the faith reposed by the insured, and that too, reinforced by continuous renewals and payments of premiums, by attempting to interpret clauses in its policies, contrary to their real spirit and merely with a view to avoid honouring claims,” the division bench noted.

It further stated that the distinction between a “new-born” and a “premature baby” or “pre-term” infant was arbitrary.

“The distinction between a ‘new-born’ and a ‘premature baby’ or a baby born ‘pre-term’ is baseless as a new-born baby can be one which is born ‘full term’ or ‘pre-term’. A full-term baby does not become more ‘newer’ any more than a ‘pre-term’ baby becomes an ‘earlier born’ or, to make it even more pointed, ‘old born.”