Star Health and Allied Insurance Company has been directed by a consumer commission in Guntur to pay the remaining balance on a Covid hospitalisation claim it had been withholding for over two years, with the court observing that the insurer deducted amounts without citing any specific policy clause and acted on its own whims and fancies.The order, passed on 24 July 2025 by the District Consumer Commission in Guntur, Andhra Pradesh, comes in a complaint filed by S.P. Srinivasa Murthy, a 32-year-old resident of Guntur, who had taken a Star Health policy with a sum assured of Rs 7.5 lakh and found himself chasing the insurer for a legitimate balance for more than two years after his Covid treatment.Covid Hospitalisation ClaimMurthy was hospitalised for Covid treatment during the period his policy was active, running from 15 April 2021 to 14 April 2022. He filed a claim for Rs 2,33,073 towards his medical expenses.Star Health's first response was to pay Rs 46,662, settling less than a fifth of what he had claimed. No detailed explanation was provided for the deduction of the remaining Rs 1,86,371.Murthy approached the insurer's grievance redressal mechanism. Following that representation, the company paid an additional Rs 1,39,015. But even after two rounds of payment, a balance of Rs 47,356 remained unpaid, and the insurer made no move to clear it.He filed his consumer complaint on 27 January 2024.Star Health Insurance Policy TermsStar Health's defence before the commission rested entirely on its policy terms. The insurer argued that all deductions were justified under the conditions of the contract.Specifically, it said Rs 10,000 had been cut towards physician processing charges it considered non-payable. A further Rs 28,050 was deducted for diagnostic tests, including CT chest scans, where it said it had paid only up to a maximum permissible limit. Another Rs 9,306 was deducted for what the insurer described as extra vials of Remdesivir administered during treatment.Star Health maintained that the amounts paid were compliant with both its policy terms and IRDAI guidelines, and that the complainant was not entitled to the remaining balance.Guntur Consumer Commission OrderThe commission was not persuaded.Examining the insurer's own policy document placed on record as evidence, the bench noted that the policy clearly covered inpatient hospitalisation expenses for periods exceeding 24 hours. The commission found that Star Health had made deductions without specifying which clauses of the policy actually permitted those deductions.The court's language on this point was direct. It observed that the amounts were deducted as per the insurer's whims and fancies, and not in accordance with any clearly cited policy provision.The commission also drew attention to the insurer's own conduct as evidence against it. Star Health had initially paid only Rs 46,662, then paid an additional Rs 1,39,015 after the complainant complained. The commission asked pointedly: if the deductions were genuinely mandated by the policy, why did the insurer pay more money after being challenged? The answer, the bench concluded, was that the original deductions had no proper basis.What Courts Are Saying About Insurance Claim DenialsThe Guntur commission's ruling fits into a pattern that consumer courts across India have been reinforcing consistently: that insurance companies cannot selectively cite policy terms to justify partial settlements without showing exactly which clause applies to each deduction.IRDAI regulations require insurers to settle claims fairly and transparently. Where a claim is denied or reduced, the insurer is expected to communicate the specific reason tied to a specific policy provision. Vague references to policy terms, without identifying the exact clause, have repeatedly been treated by consumer commissions as deficiency in service.In this case, the commission found that Star Health had done precisely that, making deductions across multiple heads, from physician charges to diagnostic limits to Remdesivir vials, without anchoring any of them to a named clause in the policy document it had itself placed before the court.What Star Health Has Been Ordered to PayThe commission directed Star Health to pay the outstanding balance of Rs 47,356 along with interest at 9 per cent per annum from the date of filing the complaint on 27 January 2024 until the date of full realisation.In addition, the insurer has been directed to pay Rs 3,000 towards mental agony and Rs 2,000 towards litigation costs.The total order, including the principal and additional amounts, comes to Rs 52,356 before interest. Star Health has been given six weeks from the date of the order to comply.Check the case judgement here: