Insurance Law | It Is Not Enough To Take Premiums – Full Disclosure of Risk Triggers Is a Legal Duty: Andhra Pradesh High Court

“Technicalities Can’t Defeat Trust: Insurance Company’s Failure to Disclose Trigger Points Vitiates Claim Repudiation,” In a significant judgment impacting the enforcement of insurance contracts under government-sponsored crop schemes, the Andhra Pradesh High Court affirming that failure to disclose the operative trigger points under the Weather Based Crop Insurance Scheme (WBCIS) amounted to a deficiency of service, while partially modifying the monetary relief granted by the National Consumer Disputes Redressal Commission (NCDRC).

Chief Justice Dhiraj Singh Thakur, speaking for the Bench also comprising Justice Ravi Cheemalapati, made a crucial legal declaration:

“Contract of insurance is governed by the principle of utmost good faith imposing reciprocal duties of disclosure on the insurer and insured. Failure to clearly communicate highly technical trigger points vitiates repudiation of claims.”

While holding the insurer liable for non-disclosure, the Court set aside NCDRC’s direction for refund of premium, reasoning that the risk was undertaken, and limited compensation to ₹10,000 per claimant, down from ₹40,000.

“Pamphlet Was Inadequate, Misleading, And Printed With Errors”: High Court Rejects Insurer’s Claim of Full Disclosure

The petitions arose from a batch of cases where mango farmers, mostly from Kurnool district, filed complaints after their crop was damaged by wind and unseasonal rain on 13.05.2012. Though they had enrolled under the WBCIS, their insurance claims were repudiated by Agriculture Insurance Company of India Ltd., on the ground that weather data on the said date did not meet the scheme’s technical trigger points, particularly that wind speed had not exceeded the 35 km/hr threshold for the relevant period.

The insurer asserted that all material terms of the scheme had been explained and that farmers had signed proposal forms containing declarations to that effect. However, the Court was unconvinced.

Referring to a key finding of the NCDRC, the Court noted:

“What was explained was only by way of the printing and distribution of a pamphlet in Telugu, which pamphlet did not at all mention the trigger points as regards wind speed etc. … Even the risk period mentioned in the pamphlet was incorrectly printed.”

The Court concluded that the scheme was “so highly technical” that a mere one-page back-to-back pamphlet was insufficient to satisfy the legal standard of disclosure, particularly when it misstated material information such as risk periods.

“A Contract Based on Partial Knowledge is No Contract at All”: Reciprocal Duty of Disclosure Affirmed

The Court relied on binding precedents from the Supreme Court, including Mahakali Sujatha v. Future Generali India Life Insurance Co. Ltd. and Anju Kalsi v. HDFC Ergo General Insurance Co. Ltd., to underline the mutual obligation of transparency between insurer and insured.

Quoting Mahakali Sujatha, the Court reiterated:

“The principle of utmost good faith puts reciprocal duties of disclosure on both parties to the contract of insurance… No material facts should be suppressed which may have a bearing on the risk being insured.”

Applying this principle to the present case, the Court held that the Insurance Company could not rely on technical parameters which it never properly disclosed to the insured farmers, especially when the claimants were largely illiterate and had relied on oral assurances and inadequate printed material.

“Refund of Premium Not Justified – Risk Was Undertaken”: High Court Partially Modifies NCDRC’s Relief

While affirming the NCDRC’s finding that there was a deficiency of service, the High Court held that the direction to refund the premium amount was not legally sustainable. Since the insurer had undertaken the risk during the coverage period, and since the insured were entitled to expect a payout in the event of loss, premium could not be reversed post facto.

“The insurance company would not be under any obligation to return to the claimants the premium amount… as was ordered to be refunded by the NCDRC.”

However, the Court acknowledged the harassment, litigation costs, and mental agony faced by the farmers, and awarded them ₹10,000 each, reducing the earlier compensation of ₹40,000 per claimant.

Judicial Review of Consumer Commission Orders – High Court Lays Down Scope

This judgment also clarified the scope of writ jurisdiction over orders passed by consumer fora. While reiterating that High Courts may not act as appellate authorities over findings of fact, the Bench clarified:

“High Court may interfere where relief granted is excessive or contrary to contractual principles while affirming findings on deficiency of service.”

Accordingly, the Court held that partial interference in the NCDRC order was justified.

Technical Rigor Cannot Override the Principle of Good Faith in Insurance Contracts

By holding the insurer accountable for non-disclosure of complex scheme conditions, the Andhra Pradesh High Court has reaffirmed that insurance contracts under government-backed schemes must meet higher thresholds of transparency, especially when dealing with vulnerable populations like farmers.

The ruling balances the legal principle of utmost good faith with practical limitations faced by rural insureds, while ensuring that public insurance companies do not escape liability through technical subterfuge.

Date of Decision: 30 January 2026