Home Loan Insurance Claim Rejected After Borrower’s Death: NCDRC Explains Why Medical History Disclosure Matters

A home loan insurance policy does not necessarily protect a borrower's family from the outstanding loan if the policyholder is found to have withheld material information about a pre-existing illness. A recent National Consumer Disputes Redressal Commission (NCDRC) order shows why accurately filling out the insurance proposal form can be critical.

In an order dated 17 August 2026, the NCDRC dismissed a plea filed by the family of Mohammad Hussain and upheld ICICI Prudential Life Insurance Co. Ltd.'s decision to reject a claim under a home loan insurance policy. The Commission found that Hussain had failed to disclose material information about his health when taking the insurance cover.

Hussain had taken a home loan of ₹ 4,26,801 from Dewan Housing Finance Ltd., now represented by Piramal Capital Housing Finance Ltd., on 13 March 2012. The loan was covered by a Home Assure insurance policy issued by ICICI Prudential Life Insurance.

The policy was obtained against a single premium of ₹ 21,801. Hussain died on 14 March 2014. His family expected the insurance policy to discharge the outstanding loan, but the insurer rejected the claim on the ground that Hussain had suppressed his medical history. The lender continued deducting the monthly instalment of ₹ 7,367 from the bank account of Hussain's son, Adil Mohammad.

The family first approached the District Consumer Forum, which directed the insurer to pay the remaining loan amount after Hussain's death and reimburse the instalments deducted thereafter. It also awarded ₹ 50,000 as compensation for mental agony and ₹ 5,000 towards litigation costs.

ICICI Prudential challenged that decision before the Chhattisgarh State Consumer Disputes Redressal Commission, which set aside the District Forum's order. The family then approached the NCDRC.

The NCDRC has now upheld the State Commission's decision and dismissed the revision petition.

The case turned on Hussain's answers in the Home Assure Enrollment Form.

The form specifically asked whether the applicant had consulted a doctor for an ailment or been hospitalised for a disorder. It also asked about diabetes or raised blood sugar, high blood pressure, kidney disorders and several other medical conditions.

However, medical records placed before the Commission showed that he had been hospitalised from 9 February to 9 March 2011 for uncontrolled diabetes mellitus, P-neuropathy, nephropathy and sepsis. The medical certificate also stated that he would require prolonged therapy and could require amputation in the future.

The insurer also relied on an Apollo Hospital discharge record from February-March 2014. It recorded Type 2 diabetes and hypertension since 2009, chronic kidney disease since January 2014, sepsis, diabetic foot and encephalopathy.

The Commission held that the earlier treatment was material information because it could have influenced the decision of a prudent insurer.