Thrissur Consumer Commission Holds Star Health Liable For Rejecting COVID Claim Over 2.5-Hour Hospitalisation Shortfall

March 27, 2026 : The District Consumer Disputes Redressal Commission, Thrissur, has held Star Health and Allied Insurence Company Limited liable for deficiency in service for rejecting a COVID-19 insurance claim solely because the insured was hospitalized for nearly 70 hours instead of the stipulated 72 hours under the policy conditions.

The Bench comprising C.T. Sabu (President), Sreeja S. (Member) and Ram Mohan R. (Member) observed that repudiation of the claim based on a shortfall of about 2.5 hours in hospitalization was arbitrary, unreasonable and legally unsustainable.

The Commission observed:

“The repudiation of the complainant’s claim solely on the ground of 2.5 hours shortfall in hospitalisation is arbitrary, unreasonable and unsustainable in law.”

The complainant, Robin A.K., had purchased a “Corona Rakshak Policy” issued by the insurer with a sum insured of Rs.1,00,000. The policy was valid from July 31, 2020 to May 12, 2021 and provided a lump sum benefit equal to 100% of the insured amount upon positive diagnosis of COVID-19 requiring hospitalization for a minimum continuous period of 72 hours.

During the policy period, the complainant tested positive for COVID-19 and was admitted to Kinder Hospital, Kalamassery on October 16, 2020. He was discharged on October 19, 2020 after receiving inpatient treatment. Thereafter, he submitted a claim seeking payment of the insured amount.

The insurer rejected the claim on the ground that the complainant had undergone hospitalization only for nearly 70 hours and had therefore failed to satisfy Clauses 3.7 and 3.8 of the policy requiring continuous hospitalization for at least 72 hours. Aggrieved by the repudiation, the complainant approached the Consumer Commission alleging deficiency in service and contending that the rejection was based on a hyper-technical interpretation of the policy terms.

The insurer relied upon the Supreme Court judgment in Surajmal Ram Niwas Oil Mills (P) Ltd. v. United India Insurance Co. Ltd. to argue that insurance contracts must be strictly construed in accordance with their terms and conditions.

After examining the policy documents and evidence on record, the Commission observed that the Corona Rakshak Policy was a benefit-based policy intended to provide financial assistance upon hospitalization due to COVID-19 and that the minimum hospitalization requirement was incorporated only to ensure genuineness and seriousness of claims.

The Commission noted that it was undisputed that the complainant had tested positive for COVID-19 and had undergone inpatient treatment during the policy period. It held that the core objective of the policy had therefore been fulfilled.

Distinguishing the insurer’s reliance on strict interpretation principles, the Commission observed that such principles cannot be applied mechanically in a manner that defeats the very purpose of the policy. It held that the complainant had substantially complied with the hospitalization requirement and that a shortfall of about 2.5 hours could not be treated as a fundamental breach.

The Commission further observed that insurance policies must be interpreted in a commercially sensible manner that advances the purpose of the policy rather than defeats it. Reliance was also placed on the Supreme Court judgment in Canara Bank v. United India Insurance Company Ltd..

Taking note of advancements in medical science, the Commission observed that hospitalization durations have reduced significantly and shorter hospital stays do not necessarily indicate lesser severity of illness. The Commission also referred to the circumstances prevailing during the COVID-19 pandemic, observing that hospitals were compelled to discharge patients as early as possible to accommodate other patients requiring treatment.

Holding that insurers occupy a dominant position in health insurance matters and are expected to act fairly and in good faith, the Commission concluded that repudiation of the claim on the basis of a marginal shortfall in hospitalization duration amounted to deficiency in service.

Accordingly, the complaint was allowed and the insurer was directed to jointly and severally pay the complainant Rs.1,00,000 towards the insured amount, Rs.10,000 as compensation for financial loss, agony and hardship, and Rs.5,000 towards litigation costs, along with interest at 9% per annum from the date of filing of the complaint till realization. Compliance was directed within 45 days from receipt of the order.

Case Title: Robin A.K. v. Star Health and Allied Insurance Company Ltd.
Case No.: CC No.159/21
Coram: C.T. Sabu (President), Sreeja S. (Member) and Ram Mohan R. (Member)